The pound is firmly on track for one of its worst days against the US dollar in recent years. Today’s 3.2% plunge against the dollar is the biggest slide since the depths of the pandemic in 2020. It’s one of the top 10 worst days against a basket of currencies since 2004, as Sky News’s Ed Conway shows:
The pound is firmly on track for one of its worst days against the US dollar in recent years.
Today’s 3.2% plunge against the dollar is the biggest slide since the depths of the pandemic in 2020.
It’s one of the top 10 worst days against a basket of currencies since 2004, as Sky News’s Ed Conway shows:
Not as bad as the day after the EU Referendum, though…..
The tumble in the pound, and in government bonds, is so serious that the Bank of England should hold an emergency meeting to raise interest rates to calm the markets, suggests a Deutsche Bank analyst.
George Saravelos, Deutsche Bank’s head of global FX research, told clients that a “large, inter-meeting rate hike from the Bank of England as soon as next week” is needed.
This would “regain credibility with the market”, Saravelos explained in a research note.
He added that a strong signal by the BoE that it was willing to do “whatever it takes” to bring inflation down quickly and move real yields into positive territory would help.
Emergency central bank meetings are rare – usually triggered by financial crises, or a pandemic, not a “fiscal event” meant to boost growth.
But Saravelos writes that the BoE needs to take action to respond to the sharp drops in sterling and gilts.
The Bank is due to hold its next monetary policy meeting in November, having raised interest rate by 50 basis points yesterday.
On the high street in the leafy suburb of Roundhay, where Liz Truss went to school and her parents still live, there is a sense of frustration, and even anger, at the measures announced in Friday’s mini-budget.
Catherine Brittain, a childminder, was forced to negotiate with her energy provider, which upped her bills from £109 a month to £350. She was able to agree to pay £200 until after Christmas.
She said: “I can’t afford to pay more. I’m worried about the cost of living and at the moment I haven’t passed that on to parents but I’m not sure how much longer I can keep it up.”
Nearly two-thirds of people think Kwasi Kwarteng’s tax cuts will benefit the rich more, according to a YouGov survey.
Of about 9,400 adults surveyed, 63% said the changes would help wealthier people more, 3% said poorer people, and 9% think both groups will benefit equally.
Some 52% said the chancellor’s measures would be not very or not at all effective at growing the British economy, while only 19% replied very or fairly effective.
Asked about the impact on people’s lives, 28% said they would end up worse off, 34% said the changes would make no difference, and 19% said they will end up better off.
These are from Paul Krugman, a winner of the Nobel Prize for economics.