London, Sep 16 (TIWN) The British pound slumped to a 37-year low on Friday after new data showed that shoppers are pulling back spending as inflation squeezes household budgets, underscoring fears that the economy may already be shrinking, media reports said.

The currency fell below $1.14, its lowest since 1985, after the Office for National Statistics said that retail sales in August dropped 1.6 per cent month-over-month, the biggest decline since December 2021 and significantly worse than economists had expected, CNN reported.

"I think the UK is in recession already," said Michael Hewson, chief market analyst at CMC Markets UK, CNN reported.

The pound has been hammered by a string of weak economic data, but also the steep ascent of the US dollar, a safe haven investment that sees inflows in times of uncertainty. The greenback is now near its strongest level in about two decades against a basket of top currencies, bolstered by expectations of another big rate hike by the Federal Reserve next week, the report said.