It means that the value of the British pound had decreased compared to foreign monetary units. In essence, it makes the British pounds in your wallet worth less. In other words: bad news.
And a few verses later...
"Got a pain in the chest
Doctors on strike what you need is a rest
It's not easy love, but you've got friends you can trust"
At least everything clear there.
master marathon runner wrote:
"The pound has dropped " is a euphemism for sexual intercourse........and consequently, "the children are created ".
Simples.