Pound hits all-time low against dollar as Liz Truss’ tax cuts come under pressure


The tax cuts announced in the mini budget by British finance minister Kwasi Kwarteng came under a lot of criticism as the pound hit an all-time low against the dollar. In the aftermath of the announcements, the currency lost almost five per cent to reach $1.0327 – the lowest since 1971.

A similar trend was seen when it comes to the Euro which is also experienced its lowest value in 20 years due to the ongoing Russia-Ukraine crisis and the COVID-19 pandemic.

“The poor situation in the UK exacerbates support for the USD, (which) can track higher again this week,” Joseph Capurso of Commonwealth Bank of Australia told Reuters.

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“If a sense of crisis about the world economy were to emerge, the USD could jump significantly.”

The announcements made by Kwarteng included a number of tax cuts along with reliefs for homeowners and people looking for loans. However, Bloomberg reported that the UK current account deficit has also widened to a record level which has is affected the pound negatively.

Kwarteng has played down the impact that his policies had on the pound and said that the government is looking to boost the economy in the long run and not just targeting short run gains.

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“As chancellor of the exchequer, I don’t comment on market movements. What I am focused on is growing the economy and making sure that Britain is an attractive place to invest,” he said at BBC One’s Sunday with Laura Kuenssberg.

Kwarteng added that Prime Minister Liz Truss may introduce even more tax cuts in the recent past.

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