How are markets responding to Kwasi Kwarteng’s mini-Budget? A sharp fall in the pound today has plenty of critics arguing that the tax-slashing announcements have already proved a failure.
Sterling fell this afternoon to $1.09, bringing the currency to another 37-year low against the dollar. This is more than a 3 per cent dip in just one day. The euro took a hit too, but a smaller one at 1.5 per cent. It’s difficult to separate this new record low from today’s announcements – but also near impossible to draw direct correlation, as the pound and euro have both been in freefall against the dollar for weeks now. With the pound already hovering at 1985-lows mid-month, it’s more difficult to say whether today’s currency shocks are a direct rebuke of Treasury policy.
By next week, we could be moving closer towards meltdown territory, or market fluctuations could have started to settle
This is where the gilt market is perhaps providing some more insight.
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