Pound takes a beating as recession fears mount

LONDON: The pound tumbled below $1.53 in its biggest drop in at least 37 years after a report showed the UK economy contracted more than forecast in the third quarter, bringing the nation to the brink of a recession. The decline surpassed that of Black Wednesday in September 1992, when the UK was driven out of Europe���s Exchange Rate Mechanism.

Gross domestic product contracted 0.5% in the three months through September, the Office for National Statistics in London said on Friday, more than the 0.2% forecast by analysts in a Bloomberg survey. The FTSE 100 index slumped as much as 9.1% and the yield on the UK 10-year gilt headed for its biggest weekly decline in a decade.

���This is once-in-a-lifetime stuff, we���re all sat under our desks with tin hats on,��� said Neil Mellor, a currency strategist in London at Bank of New York Mellon. ���The UK is in the first step towards a recession and the dollar���s bid because of repatriation flows.���

The UK currency fell to $1.5269, the lowest level since August 2002, and was at $1.5282 at 10:39 am in London, from $1.6230 on Thursday. Against the euro, the pound weakened to a record 81.96 pence from 79.69 pence.