British Pound Falls To Record Low Against The Dollar after Biggest TAX Cut

British pound drops to record low against dollar: As a result of the markets' response to the UK's largest tax cuts in 50 years, the pound has reached a record low against the dollar.

British pound drops to record low against dollar: As a result of the markets’ response to the UK’s largest tax cuts in 50 years, the pound has reached a record low against the dollar. Sterling dropped almost to $1.03 in early Asian trading before reclaiming some ground to hover around $1.07. In anticipation of a rise in borrowing, Chancellor Kwasi Kwarteng has promised additional tax cuts on top of the £45 billion plan he announced.

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British pound drops to record low against dollar: Key Points

The cost of borrowing money from the UK government also increased.
If the pound stays this low versus the dollar, imports of goods like oil and gas that are priced in dollars will be more expensive.
Additionally, other imported commodities may become significantly more expensive, driving up inflation, which is already running at its highest rate in decades.
In addition, there are worries that the government’s plans to borrow billions and slash taxes will fuel rising inflation and drive the Bank of England to boost interest rates even higher.
Millions of homeowners would have higher monthly mortgage payments as a result.
The pound has been affected by concerns about the UK economy, but the pound has also seen pressure from the dollar’s surge.
Other currencies have been losing ground to the dollar, and amid worries about the possibility of a recession, the euro hit a new 20-year low against the US currency.

UK’s largest tax cuts: Predictions for the British Pound

The Bank increased interest rates last week by.25% to 2.25% in an effort to lower inflation, which is at a 40-year high of 9.9%.
The rate rise, which brought rates to their highest level in 14 years, was the eighth in a row.
Some analysts, however, have hypothesised that the Bank may call an emergency meeting this week to raise interest rates once more.
A statement from the Bank of England was declined.
Interest rates may rise as high as 5.5 percent by the spring of next year, according to market observers.

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