Sterling endured a rollercoaster ride today as it slumped to an all-time low against the dollar in the wake of Kwasi Kwarteng’s tax-cutting Budget – with fears the Bank of England will be forced to step in to avert a crisis.
The Pound was ‘absolutely hammered’ in trading early this morning, dropping to just $1.0327 – under the grim 1985 baseline of $1.0545.
The ground was clawed back by early afternoon, returning to just over $1.08, although that appears to be partly due to expectations of an emergency 0.75 percentage point interest rate hike coming within days.
Because many key commodities are priced in dollars, a weak pound drives inflation up further. Markets are now pricing in the headline interest rate reaching 6 per cent by next year, heaping more misery on families.
The cost of government borrowing also rose to the highest rate in a decade – causing another headache for Kwasi Kwarteng as he is using extra debt to fund tax cuts and the energy bills bailout.
However, the…
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