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Chris Philip in Tweet blunder as pound drops to record high

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The pound fell precariously close to its all-time low against the US dollar tonight, just hours after a Treasury secretary boasted that it was ‘strengthening’ thanks to Kwasi Kwarteng’s ’emergency budget’.

As the markets expressed skepticism about the Chancellor’s massive tax cuts, Sterling plunged below $1.09 — within sight of the $1.0545 it hit in March 1985.

Treasury yields – basically government bond yields – also saw the largest one-day rise in decades, while the FTSE 100 fell below 7,000 for the first time since March.

The grim moves came despite Chief Secretary Chris Philp’s overly optimistic tweet this morning at 10.17am while Mr Kwarteng was still on his feet in the House of Commons.

He tweeted ‘Great to see the pound strengthening on the new UK growth plan’, accompanied by a chart showing a brief spike against the US dollar at 10am.

However, at 10:44 AM, the currency had hit another 37-year low.

By this evening, it had fallen sharply again and plunged through the $1.09 level.

Mr Philp was only installed by Liz Truss after she became prime minister earlier this month, but finance ministers have long avoided commenting on currency issues – in part because their comments can shake markets and backfire.

Pictured: The pound peaked at 10 a.m. as Kwasi Kwarteng announced its mini-budget

Pictured: The pound peaked at 10 a.m. as Kwasi Kwarteng announced its mini-budget

Pictured: By 10:44 a.m., the pound had fallen to a new all-time low within minutes of peaking

Pictured: By 10:44 a.m., the pound had fallen to a new all-time low within minutes of peaking

Tonight, the pound pushed new lows and plunged below $1.09

Tonight, the pound pushed new lows and plunged below $1.09

It comes after the Bank of England launched another rate hike of 0.5 percentage points to 2.25 percent on Thursday, warning that the UK could already be in recession.

The central bank previously predicted the economy would grow in the current financial quarter, but now said it believes gross domestic product (GDP) will fall 0.1 percent, meaning the economy would have seen two consecutive quarters of decline. – the technical definition of a recession.

Economists had warned that the Chancellor’s tax-cutting ambitions could put further pressure on the pound, which was also impacted by the strength of the US dollar.

Former Bank of England policymaker Martin Weale warned that the new government’s economic plans “will end in tears” – with a run on the pound in an event similar to the one in 1976.

Finance Minister Kwasi Kwarteng delivers his mini-budget to the House of Commons today

Finance Minister Kwasi Kwarteng delivers his mini-budget to the House of Commons today

Economists at ING also warned Friday that the pound could fall further to 1.10 against the dollar amid difficulties in the gold market.

Chris Turner, Global Head of Markets at ING, said: “Typically, a looser fiscal and tighter monetary policy is a positive mix for a currency – if it can be financed with confidence.

Here’s the problem: investors have doubts about the UK’s ability to fund this package, hence the underperformance of gold.

“Now that the Bank of England has committed to winding down its gold portfolio, the prospect of indigestion in the gold market is real and should keep pound sterling vulnerable.”

Mr Kwarteng unveils massive package of tax cuts in the House of Commons this morning

Mr Kwarteng unveils massive package of tax cuts in the House of Commons this morning

Meanwhile, concerns about higher interest rates and pressure on consumer spending continued to weigh on the stock market.

The FTSE 100 fell 1.48 percent in early trading to 7,054.64 – its lowest level since mid-July.

Derek Halpenny, head of research at MUFG, warned that the pound could fall further due to policies that are “credible and raise concerns about external financing pressures as the fiscal and current account deficits combine to around 15 percent of the current account.” GDP seem to be going’.

Of the international banks and research consultancies surveyed by Reuters last week, 55 percent said there was a high risk that confidence in UK assets would deteriorate sharply over the next three months.

Meanwhile, Bank of England policymaker Jonathan Haskel said yesterday that the central bank was in a difficult position as the government’s expansionary fiscal policy seemed to put it at odds with the BoE’s efforts to cool inflation.

Economists have sounded the alarm about the massive loans needed to close the gap in the government’s books.

The two-year freeze on energy bills for households and businesses announced earlier this month could cost more than £150bn on its own, while the tax cuts could add another £50bn to the tab.

The respected IFS think tank suggested it would be the biggest tax measure since Nigel Lawson’s 1988 budget, when Margaret Thatcher, Mrs Truss’ heroine, was prime minister.

The dangers of driving up Britain’s £2.4 trillion mountain of debt as the Ukraine crisis sends inflation soaring was underlined by the pound’s continued decline against the US dollar, which hit a new low in 37 years this morning. barely reached 1.11.

In August and September, 10-year Treasury yields have seen their biggest rise since October and November 1979, highlighting the markets’ nervousness about the situation.

However, Ms. Truss and Mr. Kwarteng argue that ramping up economic activity could make all the difference, pointing to decades of moderate productivity improvements.

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