Pound Plummets as UK Faces Economic Uncertainty

The British pound dropped against the dollar and euro due to unexpectedly weak retail sales in December, indicating a grim economic outlook. Investors are now anticipating significant rate cuts by the Bank of England. Retailers in the UK are expected to raise prices in response to new tax burdens.

On Friday, the British pound fell against the dollar and euro, driven by disappointing December retail sales figures that have exacerbated the already bleak economic forecast.

According to the Office for National Statistics, retail sales, adjusted to account for Black Friday, decreased by 0.3% in December, contrary to economists' expectations of a 0.4% increase. This led investors to anticipate deeper rate cuts by the Bank of England by 2025.

UK retailers are poised to increase prices due to higher employer social security costs, contributing to the pound's fluctuation. With the UK economy stagnating, fears of stagflation rise as fiscal challenges persist.

(With inputs from agencies.)