The pound fell sharply against its major counterparts in the European session on Friday, as U.K. retail sales declined more than expected in August, suggesting that the economy is falling into a recession.

Data from the Office for National Statistics showed that the retail sales volume declined 1.6 percent month-on-month, in contrast to July's 0.4 percent increase. Economists had forecast a moderate 0.5 percent decline.

Likewise, retail sales excluding auto fuel were also down 1.6 percent after rising 0.4 percent in July. Sales were expected to ease 0.7 percent.

Non-food stores sales volumes fell 1.9 percent and food store sales decreased 0.8 percent. Automotive fuel sales volumes slid 1.7 percent.

On a yearly basis, retail sales decreased for the fifth straight month in August. Sales decreased 5.4 percent, following July's 3.2 percent fall. Economists had forecast an annual drop of 4.2 percent.

Sales excluding auto fuel slid 5.0 percent versus a 3.1 percent decrease in the previous month. This was also faster than economists' forecast of -3.4 percent.

European markets are mostly lower, tracking a sell-off in Asia and on Wall Street, amid warnings from the World Bank and the International Monetary Fund that the global economy is heading into a recession.

The World Bank said on Thursday that the world's three largest economies—the United States, China, and the euro area—have been slowing sharply and even a moderate risk to the global economy over the next year could tip it into recession.

The pound touched 1.1350 against the greenback, a level unseen since 1985. The pound is likely to face support around the 1.11 level.

The GBP/JPY pair fell to a 10-day low of 162.74. Immediate support for the pound may be found around the 157.00 level.

The pound depreciated to 1.0948 against the franc for the first time since 1974. If the pound extends drop, 0.93 is possibly seen as its support level.

The pound weakened to 0.8772 against the euro, its lowest level since February 2021. On the downside, support is seen near the 0.89 level.

Looking ahead, University of Michigan's preliminary consumer sentiment index for September is due in the New York session.

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