The pound fell to an all-time low
The British pound fell on the international Forex market by almost 5% against the dollar to a record low of $1.0384. The pound against the US dollar fell by 0.85% to $1.0762.
The UK currency depreciated after the country’s Treasury Department promised to continue tax cuts, raising fears that the new policy will lead to a sharp increase in inflation and public debt, writes Bloomberg. The collapse of the pound was the biggest intraday drop since March 2020, when markets were in a panic due to the start of the COVID-19 pandemic, the publication calculated.
The sale of currency began on Friday, after the announcement by the government of a plan for large-scale tax cuts in the UK, which will affect individuals and businesses and increase the budget deficit.
“The collapse of the pound shows that the markets do not trust the UK,” said Jessica Amir, strategist at Saxo Capital Markets. “The pound is on the verge of parity with the dollar, and the situation will only get worse.”
The UK currency has already fallen 20% against the dollar this year. According to Bloomberg, the fall of the British pound in 2022 surpassed the collapse that was observed after the vote to leave the European Union (Brexit) in 2016. Then the UK currency depreciated by about 16% in a year.