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The pound slumps to a new 37-year low against the US dollar


Pound falls again after Kwarteng ’emergency budget’: Sterling slumps to 37 to low against USD at $1.11

The pound fell to a new 37-year low as the Chancellor unveiled tens of billions of pounds in tax and spending cuts.

Equity markets were also particularly depressed, with the FTSE 100 plunging to a two-month low.

The pound fell 0.89% to US$1.115 as Kwasi Kwarteng addressed parliament at 9.30am on Friday.

It has since stabilized around $1.119, but that remains below the previous 37-year low hit earlier this week after concerns over soaring interest rates hit the currency.

The currency was holding firm against the euro, with much of the decline on the strength of the greenback – but there is growing nervousness over the government’s strategy of borrowing for an energy bill freeze and cuts drastic taxes.

Markets pushed interest rates on government debt to an 11-year high.

Derek Halpenny, head of research at MUFG, warned that the pound could fall further due to policies “lacking credibility and raising concerns about external financing pressures given that the combined fiscal and current account deficit appears to be heading around 15% of GDP.

Among international banks and advisory firms polled by Reuters last week, 55% said there was a high risk that confidence in British assets would deteriorate sharply over the next three months.

The pound fell to a fresh 37-year low against the dollar today as markets braced for Kwasi Kwarteng’s ’emergency budget’

Meanwhile, Bank of England policy chief Jonathan Haskel said yesterday the central bank was in a difficult position as the government’s expansionary fiscal policy appeared to put it at odds with the BoE’s efforts to calm the economy. ‘inflation.

Economists have expressed concern over the massive borrowing that will be needed to cover the hole in the government’s books.

The two-year freeze on household and business energy bills announced earlier this month could cost more than £150billion alone, while tax cuts could add another £50billion to the tab.

The respected IFS think tank has suggested it will be the biggest tax measure since Nigel Lawson’s 1988 budget when Ms Truss’ heroine Margaret Thatcher was prime minister.

The dangers of a rise in the UK’s debt mountain of £2.4 trillion as the Ukraine crisis drives up inflation have been underscored by the pound’s continued decline against the US dollar, hitting a new 37-year low of just 1.11 this morning.

So far in August and September, the 10-year government bond yield has seen the largest increase since October and November 1979, which has heightened market jitters over the situation.

However, Ms. Truss and Mr. Kwarteng say picking up economic activity can make up the difference, pointing to decades of lackluster productivity improvements.

Mr Kwarteng will unveil a huge package of tax cuts in the House of Commons this morning

Mr Kwarteng will unveil a huge package of tax cuts in the House of Commons this morning

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