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Pound slumps to fresh 37-YEAR low against US dollar

Pound plunges to a new 37-year low against the US dollar – below $1.12 – and UK government borrowing costs rise as markets brace for Kwasi Kwarteng ’emergency budget’

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Sterling fell to a new 37-year low against the dollar today as markets braced for Kwasi Kwarteng’s Emergency Budget.

The pound fell about 0.6 percent, reaching $1,117, setting another unwelcome record going back to 1985.

The currency held up against the euro, with much of the decline to the strength of the dollar – but there is growing nervousness about the government’s strategy of lending for a power bill freeze and sweeping tax cuts.

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

Derek Halpenny, head of research at MUFG, warned that the pound could fall further due to policies that are “credible and raise concerns about external financing pressures as the fiscal and current account deficits combine to around 15 percent of the current account.” GDP seem to be going’.

Of the international banks and research consultancies surveyed by Reuters last week, 55 percent said there was a high risk that confidence in UK assets would deteriorate sharply over the next three months.

Sterling fell to a new 37-year low against the dollar today as markets brace for Kwasi Kwarteng's 'Emergency Budget'

Sterling fell to a new 37-year low against the dollar today as markets brace for Kwasi Kwarteng’s ‘Emergency Budget’

Meanwhile, Bank of England policymaker Jonathan Haskel said yesterday that the central bank was in a difficult position as the government’s expansionary fiscal policy seemed to put it at odds with the BoE’s efforts to cool inflation.

Economists have sounded the alarm about the massive loans needed to close the gap in the government’s books.

The two-year freeze on energy bills for households and businesses announced earlier this month could cost more than £150bn on its own, while the tax cuts could add another £50bn to the tab.

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

The dangers of driving up Britain’s £2.4 trillion mountain of debt as the Ukraine crisis sends inflation soaring was underlined by the pound’s continued decline against the US dollar, which hit a new low in 37 years this morning. barely reached 1.11.

In August and September, 10-year Treasury yields have seen their biggest rise since October and November 1979, highlighting the markets’ nervousness about the situation.

However, Ms. Truss and Mr. Kwarteng argue that ramping up economic activity could make all the difference, pointing to decades of moderate productivity improvements.

Mr Kwarteng unveils massive package of tax cuts in the House of Commons this morning

Mr Kwarteng unveils massive package of tax cuts in the House of Commons this morning

Mr Kwarteng unveils massive package of tax cuts in the House of Commons this morning

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