British pound falls to new low against the dollar after taxes slashed
The British pound hit an all-time low Monday against the U.S. dollar amid market concerns about the new government’s plans to boost growth after it unveiled its biggest shake-up to the tax system in 50 years.
The sharp drop in the value of the pound piled pressure on the British government as it grapples with soaring public debt and a cost-of-living crisis, amid deteriorating investor confidence.
It also raised the prospect that Britain’s central bank may intervene in currency markets to shore up the pound.
Sterling’s slump in part reflects the strength of the U.S. dollar, which has been boosted by higher interest rates.
But the pound has also dropped against the euro, indicating specific concerns about the British economy.
The pound crashed to a record low of $1.0327 in Asian trading early Monday, before regaining some ground and stabilizing around $1.07 — still well down from where it was on Friday morning before the government unveiled its “mini-budget.”
weaker currency, of course, does not necessarily reflect a weak economy. In many cases, it may be advantageous, for example making British exports cheaper for consumers in the United States — and so a weak pound will boost overseas sales for companies that are export-oriented.