GBP reaches an all-time low against the USD

Daily Currency Update

The British pound has fallen to an all-time low against the US dollar as markets react to the UK's biggest tax cuts in over 5 decades. This morning, GBP fell close to $1.03 before regaining some ground to above $1.07 levels before lunch.

The pound's slide came after Chancellor, Kwasi Kwarteng, on Sunday promised more tax cuts on top of a £45bn package he announced on Friday, amid expectations borrowing will surge. Sterling, along with other major currencies, has also been under pressure due to the strength of the US dollar.

There are also concerns that the government's plans to cut taxes and borrow billions will stoke high inflation and force the Bank of England to raise interest rates even further. Some economists have speculated that the Bank of England may call an emergency meeting to raise interest rates this week to hike interest rates again.

Last week, the Bank raised interest rates by half a percentage point to 2.25% to try to calm inflation which is at a 40-year high of 9.9%. The interest rate increase was the seventh in a row and took rates to the highest in 14 years.