The pound nosedived by nearly a full percent to $1.110 after the Chancellor gave his statement to the House of Commons earlier this morning before rising slightly. For the day, it had plummeted by 1.4 percent against the greenback.
It is now below the previous 37-year low struck earlier this week after concerns over surging interest rates hit the currency.
Sterling has also plunged against the euro this morning, down by nearly half-a-percentage point today to €1.139.
Heather Stewart, special correspondent at the Guardian, warned: “Sterling’s falling off a cliff. Imagine what the Tories would be saying if this was the City’s response to, say, a @johnmcdonnellMP budget?”
Antonello Guerrera, UK and Ireland correspondent for La Repubblica in Italy, tweeted: “A tragic year for the British pound. Amen.”
Sky News economics editor Ed Conway posted a graph showing the huge downward trend of the pound, and wrote: “The pound is falling. Fast.”
Labour Party MP Diane Abbott reposted that tweet, and wrote: “All Tory Chancellors end in failure. Few do it in their first week in the job.”
The sudden fall in the pound comes after the Bank of England (BoE) announced a 0.5 percentage point interest rate hike to 2.25 percent and warned the UK could already be in recession.
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The BoE had forecasted the the UKeconomy would grow in the current financial quarter but has now warned Gross Domestic Product (GDP) could fall marginally by 0.1 percent.
If this were to happen, the economy would have seen two consecutive quarters of decline – the technical definition of a recession.
Economic experts have warned the plans from the new Chancellor to cut taxes could pile further pressure on the pound, which is not being helped by a strong US dollar.
Former Bank of England policy maker Martin Weale cautioned the economic plans from Prime Minister Liz Truss’ newly-formed Government will “end in tears”.
Economists at banking giant ING have also warned the pound could fall even lower than below its current level against the US dollar.
Chris Turner, global head of markets at ING, said: “Typically looser fiscal and tighter monetary policy is a positive mix for a currency – if it can be confidently funded.
“Here is the rub – investors have doubts about the UK’s ability to fund this package, hence the gilt underperformance.
“With the Bank of England committed to reducing its gilt portfolio, the prospect of indigestion in the gilt market is a real one and one which should keep sterling vulnerable.”
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