The pound has fallen to a fresh 37-year low against the dollar as markets react to the Chancellor’s mini-budget announcement.
British stocks also fell after Kwasi Kwarteng outlined a series of tax cuts and economic measures in a massive financial shakeup in the country.
The pound fell more than 1% against the dollar, falling below $1.11.
The currency has fallen over the past few weeks, in part due to the strength of the US dollar.
Meanwhile, Britain’s FTSE 100 of major stocks fell to its lowest level in more than two months.
City analysts have raised their expectations of faster and higher interest rates after the government announced a £45bn tax gift, leading some to conclude inflation will remain high for some time to come.
- What the mini-budget means for you
- The UK may already be in a recession – Bank of England
According to Bloomberg data, analysts expect UK interest rates to hit 5.2% in August 2023, amid rising expectations that there could be a 1 percentage point rate hike at the next Bank of England meeting in November.
On Thursday, the bank hiked UK interest rates by half a percentage point to 2.25%.
The cost of servicing the UK’s debt has also risen following the announcement of government bonds to fund tax cuts.
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