Pound drops to all time low against the dollar following UK Government tax cut announcement

Watch more of our videos on ShotsTV.com 
and on Freeview 262 or Freely 565
Visit Shots! now
The drop in value comes following the ‘mini budget’ which was held on 23 September

The value of the pound has dropped to a record low against the dollar.

The drop comes as the markets react to the biggest tax cuts in the UK for decades.

Hide Ad
Hide Ad

The value of the pound had dropped to roughly $1.05 when the markets opened up this morning (September 26).

Another reason for the drop in value of the pound is the increasing value of the dollar, which has in recent weeks increased the pressure on the pound.

Chancellor Kwasi Karteng delivered his first budget on 23 September Chancellor Kwasi Karteng delivered his first budget on 23 September
Chancellor Kwasi Karteng delivered his first budget on 23 September | AFP via Getty Images

On September 23, Chancellor Kwasi Kwarteng announced £45 billion worth of tax cuts in a ‘mini-budget’ that also included a shake up of stamp duty and reversing the planned increase in national insurance.

The plummet in value has led to some concerns that the pound could even be close to parity with the dollar by as early as the end of the week.

Hide Ad
Hide Ad

What does the drop in value mean?

One result of the weakened pound is that commodities that are imported, things such as oil and gas, will become more expensive.

People from the UK visiting the USA will also notice that they will get less dollars for their pound sterling.

How will the Bank of England respond?

Some leading investors believe that the Bank of England will be forced into action to prevent a further slide to the value of the pound.

Stephen Innes, managing partner at SPI Asset Management told the BBC.

Hide Ad
Hide Ad

"To stop the bleeding even temporarily, the Bank of England may well enter ‘whatever it takes’ territory to bring inflation down. An emergency meeting rate hike could happen as soon as this week to regain credibility in the market. We could even see a hike today."

Related topics:

Comment Guidelines

National World encourages reader discussion on our stories. User feedback, insights and back-and-forth exchanges add a rich layer of context to reporting. Please review our Community Guidelines before commenting.

Follow us
©National World Publishing Ltd. All rights reserved.Cookie SettingsTerms and ConditionsPrivacy notice