The British currency is likely to remain under pressure in the coming days.
(Photo: dpa)
London With the new British government less than three weeks in office, the markets have already issued a no-confidence vote to Prime Minister Liz Truss and her Finance Minister Kwasi Kwarteng. The Conservatives’ economic policy plans – massive tax cuts on credit – have caused the exchange rate of the pound to collapse and pushed up interest rates on British government bonds. The market reactions to London’s change of course were stronger than those to the right-wing populists’ victory in the parliamentary elections in Italy.
The pound sterling temporarily fell almost five percent against the US dollar early Monday morning, hitting $1.035, its lowest level against the greenback since 1971. The British currency also lost more than 3.7 percent against the euro at times. The British currency later stabilized again at a low level. However, parity with the dollar before the end of this year is now considered possible.
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