The British pound is hammered in overnight trading as commentators count the cost of Brexit and the ‘mini budget’.
The pound fell to another record low against the dollar as markets react to the UK’s biggest tax cuts in 50 years.
The pound’s value affects everyone – from holidaymakers and shoppers to business owners and investors.
Investors all around the world trade huge amounts of foreign currency every day. Along with the supply and demand rules, the rate at which investors swap currencies also determines what rate people get at the bank or foreign exchanges.
The pound is hammered in overnight trading
In early Asia trade, sterling slipped just below $1.04 – the lowest level since decimalisation in 1971 – before regaining some ground to about $1.05.
That came after Chancellor Kwasi Kwarteng unveiled historic tax cuts funded by huge increases in borrowing.
The pound has also been under pressure as the dollar gets a boost by the US central bank continuing to raise rates.
Kwasi Kwarteng announced a massive shake-up
On Friday, Chancellor Kwasi Kwarteng announced a massive shake-up of UK taxes.
After little more than two weeks in the role, Chancellor Kwasi Kwarteng announced plans to scrap the top rate of income tax, reverse a rise on corporation tax, and ditch the cap on bankers’ bonuses – in a move he says will make the UK a more attractive prospect for investment.
Under the plans, which he hailed a “new era” for the economy, income tax and the stamp duty on home purchases will be cut and planned rises in business taxes have been scrapped.
Mr Kwarteng said a major change of direction was needed to kick-start economic growth.
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