British pound falls to lowest level against dollar since 1985

Sept. 7 (UPI) -- On Wednesday the British pound fell to its lowest level against the U.S. dollar since 1985.

Sterling fell to $1.1406, a level not seen since 1985 when Margaret Thatcher was prime minister. Like many countries, Britain has been battling double-digit inflation and also the prospect of a long economic contraction.

"The markets are seemingly relishing the opportunity to bash the British pound," Valentin Marinov, head of G-10 currency research at Credit Agricole, told Bloomberg.

The last time the sterling-dollar exchange rate was this low, the world's richest nations signed the Plaza Accord, an agreement to weaken the U.S. dollar.

Sterling's fall also comes as the U.S. dollar has surged amid global recession fears and the Federal Reserve's interest rate hikes.

According to CNBC, Deutsche Bank on Monday warned of a sterling crisis, as investors await new British Prime Minister Liz Truss' policies.

"With the current account deficit already at record levels, sterling requires large capital inflows supported by improving investor confidence and falling inflation expectations. However, the opposite is happening," Deutsche Bank FX Strategist Shreyas Gopal said in a note.

Against the euro, the pound was down almost 1% on Wednesday, although it hasn't taken nearly as much of a beating. For the year it is down just 3%.