What was once a story about the pound depreciating due to a growing Fed-Bank of England policy divergence might have evolved into the early stages of a currency crisis, industry experts argue, as pressure for the UK central bank to hike rates mounts.
New chancellor Kwasi Kwarteng's £45bn package of tax cuts, the largest since 1972, was designed to boost the economy but instead spooked investors, who fear the government will run up public borrowing to unsustainable levels. As trading opened in Asian markets on Monday (26 September), the pound slumped to a record low against the dollar amid fears the fiscal policies unveiled in the government's Mini Budget would worsen inflation and threaten public finances. Gordon Shannon, portfolio manager at TwentyFour Asset Management, said that while the pound's weakness is already well beyond...
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