Currency Note

The pound plummets to 51-year low following chancellor’s tax cuts

By Alex Bennett September 26th, 2022

Sterling has fallen to its lowest level against the dollar in over 5 decades following Chancellor's tax cuts.

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GBP : Sterling at a 51-year low following chancellor’s tax cuts

Sterling’s is still weak after taking a dramatic fall against both the dollar and the euro over the weekend. The fall followed a week of record lows for the pound, the latest was this morning’s 51-year low triggered by news of the chancellor’s mini-midget.  Financial markets are concerned that the chancellor’s tax cuts will require additional borrowing at higher rates.

As well as a speech from the BoE, there are a number of UK data releases markets will be watching today including BoE consumer credit, mortgage lending and mortgage approvals.

GBP/USD over the past year

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EUR: Euro weaker against dollar

The euro remained choppy against sterling last week but is stronger today after making fresh gains over the weekend. It’s a different story for the EUR/USD rate however as the euro remains weaker against the dollar.

There are lots of important data releases for the eurozone this week, including Germany’s annual inflation rate on Thursday. Markets are pricing inflation to hit 8.9% following a 7.9 increase in the last data.

USD: The dollar begins the week with fresh gains

The dollar continues to strengthen against both currencies.

Markets will be listening out for three speeches from the Federal Reserve today.

Meanwhile, sales of new single-family homes in the US are predicted to dive to 0.49m. This follows a 12.6% plunge to a seasonally adjusted annualised rate of 0.511m in July. Data will be released tomorrow afternoon.

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