The pound slumped to a 37-year low against the US dollar yesterday after the Government unveiled its radical tax-cutting plans. 📉
The Chancellor’s Budget should, on paper, stimulate the economy The pound slumped to a 37-year low against the US dollar yesterday after the Government unveiled its radical tax-cutting plans.
Several international banks warned that sterling was facing a confidence crisis, with investors predicting that the BoE would have to raise the base rate by a near-unprecedented 1 percentage point next month. Financial markets are pricing in a rate increase to 5.5 per cent by the end of the year, up from a prediction of 4.75 yesterday.
George Saravelos, an analyst at Deutsche Bank, said: “Both the pound and gilts [bonds] are experiencing historical drops. The market is giving very strong signals it is no deficit position at the current configuration of UK real yields and exchange rate.
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