British Pound Plummets To Historic Low Against the U.S. Dollar

British Pound
British Pound

The Bank of England on Monday said it is monitoring financial market developments “very closely” after a dramatic morning of market turmoil sent the British pound to an all-time low against the U.S. dollar.

Sterling shed as much as 4.8% to trade below $1.04 in the early hours of Monday morning, extending losses from late last week when Finance Minister Kwasi Kwarteng outlined the new U.K. government’s so-called “mini-budget.”

The U.K. currency has slightly recovered, trading 1.5% lower at $1.0695, as analysts predict the Bank of England may need to hike interest rates more aggressively.

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“The Bank is monitoring developments in financial markets very closely in light of the significant repricing of financial assets,” Bank of England Governor Andrew Bailey said in a statement.

“The role of monetary policy is to ensure that demand does not get ahead of supply in a way that leads to more inflation over the medium term,” Bailey said.

The BOE governor said the central bank’s monetary policy committee would make a “full assessment” at its next scheduled meeting in November “and act accordingly.”