Strong fall records the sterling against him dollarfalling below the symbolic $1.10 mark and nearing an all-time low as announcements made by the Chancellor of the Exchequer earlier today worried investors at a time when the UK may already be in recession.
Against of the dollar, which benefits from resilience of the US economy and its “safe haven” status, the pound was down 2.71% at $1.0956 around 5:40 p.m. (Greece time). It is the lowest level to which it has fallen sterling since 1985, when its exchange rate against the dollar reached 1.0520.
Freezing energy costs for individuals and companies, but also the tax cut announced by the new British government aimed at boosting growth worries investors. The first measure alone, freezing energy prices, is expected to cost £60bn in the first six months.
“Beginning with Brexitthe Bank of England’s delay in raising interest rates and now fiscal policy, I believe the UK will go down in history as one of the worst macroeconomic managements of a major country in a long time,” commented the former Chancellor of the Exchequer USA Larry Summers, estimating that the exchange rate of the pound may even fall to 1 dollar.
“THE sterling is in danger”, warned the George Saravelos, analyst at Deutsche Bank, noting that the pound is falling even as interest rates on British debt are rising, which is “very rare in advanced economies.” “We are concerned that investor confidence in the UK is rapidly eroding,” he added.
The British economy shows indications of bending and the Bank of England predicts a recession from the third quarter of the year.
The steep fall of the pound also overshadowed it euro down 1.27% against dollar. The euro reached $0.9711its lowest level since 2002.
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