Forex: Pound Heads For Largest Monthly Decline In 16 Years

The pound dropped versus the dollar Friday, heading for the biggest monthly decline in 16 years, as consumer confidence slumped in October amid speculation a recession looms.

The U.K. currency snapped a three-day gain against the dollar after an index of sentiment slid to minus 36, close to the weakest level since at least 1974, as the financial crisis spooked shoppers, GfK NOP said today in a report. A gauge of consumer willingness to make major purchases dropped 11 points to minus 42, the lowest since the series began the same year.

The pound dropped to $1.6180 as of 9:40 a.m. in London, from $1.6451 yesterday. Still, the U.K. currency is higher on the week, but is down 8.7 since Sept. 30, the steepest monthly decline since 1992.