The pound fell against currencies around the world after the Chancellor’s mini-budget on Friday as traders rush to sell the pound.
Sterling fell to an all-time low against the dollar on Monday morning, but it’s not the only currency it’s feeling bad against.
The pound fell against the Albanian lek, the Lebanese pound and the Malaysian ringgit, among many others, as Asian markets opened on Monday.
Currency traders reacted to Chancellor Kwasi Kwarteng’s news that the government would increase borrowing and cut taxes. The increased level of borrowing makes holding the pound more risky, so traders have been eager to sell it.
The pound rose slightly from the morning’s crash and has now recovered slightly against the dollar to around $1.08, a trend that has repeated against other currencies.
The pound fell to 1.09 euros against the euro early on Monday but is now around 1.12 euros.
The pound sterling also fell against the Chinese yuan to 7.47 yen, a further fall from last Friday’s fall. It has now risen again to around 7.75 yen.
Joshua Raymond, director of financial brokerage XTB, said Mr. Kwarteng’s comments about the political show over the weekend spooked the markets.
“The Chancellor’s comments over the weekend that this tax cut is just the beginning raised suspicions about the state of the UK’s finances over the medium term. To highlight this, the pound sterling is falling not only against the dollar, but also against the euro and yen,” he said.
“This means that the recent falls are not only due to the strengthening of the dollar, but also to the weakness of the pound sterling.”
Naeem Alslam, Chief Market Analyst at AvaTrade, explained the pound’s fall by stating: “The main reason for the current fall in the pound is that traders are losing confidence in the UK’s ability to repay its debt as the debt-to-GDP ratio continues to rise.”
Credit: www.independent.co.uk /