The pound has hit a new 37-year low against the dollar as new official retail figures painted a bleak picture of the UK’s economy.

Sterling dropped below 1.14 dollars for a couple of hours on Wednesday morning, pushing it below recent lows and taking it to its worst point since 1985.

The drop came after newly released retail figures showed a drop of 1.6% in August, compared to the 0.5% fall economists predicted.

“This morning’s retail sales in the UK continued to show a deteriorating consumption picture in the UK, which emerged more from the continuation of a steady downtrend from last summer rather than the single grim data point in a rather volatile series,” said Francesco Pesole, a currency expert at ING.

“This has been the last important piece of data before the Bank of England meeting on Thursday and has hit the pound this morning.”

The pound regained some ground in the early afternoon but was still trading down around 0.5% against the dollar, buying a little over 1.14 dollars. It lost 0.3% against the euro, also trading at a little over 1.14 euros.

The drop came on the 30th anniversary of Black Wednesday, when the UK had to withdraw from the European Exchange Rate Mechanism (ERM).

The ERM was designed to ensure that the exchange rates between European currencies remained stable.

Governments and central banks had to ensure that their currency did not fluctuate by more than 6% from their European neighbours.

The UK failed.

The value of the pound was dropping quickly and the John Major government spent billions trying to prop it up.

But it could not keep up with currency traders desperate to sell pounds.

Eventually, the government had to pull out of the ERM, something which damaged the Conservative Party’s reputation on handling the economy for years.

Sterling has been weak against the dollar for months, largely because of the strength of the US currency.

The euro has also been at multi-decade lows against the dollar.