The British currency is likely to remain under pressure in the coming days.
(Photo: dpa)
London With the new British government in office less than three weeks, the markets have already issued a vote of no confidence in the cabinet led by Prime Minister Liz Truss and Finance Minister Kwasi Kwarting. The Conservatives’ economic policy plans have caused the exchange rate of the pound and the valuation of government bonds to collapse.
Sterling was temporarily down 4.7 percent in early Monday trading after Chancellor Kwarteng signaled he would push ahead with more tax cuts. In the course of a price slump that lasted 20 minutes, only $ 1.0350 was paid for the British currency at times. The pound has never been so weak against the US currency.
Options markets are now pricing in a 54 percent chance that sterling will fall to par with the dollar this year. Against the euro, the pound fell by up to 3.7 percent on Monday to just 1.0787 euros at times.
Analysts warn of ‘perfect storm’
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