The pound sterling fell sharply against the US dollar

During today’s trading, the pound sterling fell sharply against the US dollar and hit a historic low on the signals of the British Treasury about the likelihood of new tax breaks in addition to those announced last week.

The rate fell by 2.5% to $1.0588 compared to $1.0859 at the close of the previous session. Earlier in the day, the rate fell to $1.0327, which is the lowest level since 1971, when the UK switched to a decimal currency system.

Last week, UK Treasury Secretary Quasi Kwarteng announced a massive tax cut that will affect individuals and businesses and increase the budget deficit for the current fiscal year by more than 70 billion pounds.

“This government has only been in office for 19 days,” Kwarteng told the BBC on Sunday. “In the coming year, I would like to see people keep even more of their income because I believe the people of the UK will be the engine of the country’s economy.”

The market regarded this as a hint of new tax incentives, writes Bloomberg.

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The ICE-calculated index, which shows the performance of the US dollar against six currencies (the euro, the Swiss franc, the yen, the Canadian dollar, the pound sterling and the Swedish krona), rose by 0.75%, exceeding 114 points for the first time since May 2020, according to Trading Economics .

The dollar is supported by the demand for defensive assets caused by fears of a global recession. In addition, currency traders point out that the Fed is tightening monetary policy at a faster pace than the rest of the world’s leading central banks.

The euro/dollar pair was trading at $0.9640 by 9:18 Moscow time compared to $0.9687 at the close of the session on Friday, the euro loses about 0.65% and again renews two-decade lows.

The exchange rate of the American currency against the Japanese national currency increased by 0.36% and amounted to 143.82 yen compared to 143.31 yen on Friday.

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