The British pound fell sharply against the US dollar on Monday after the new government of Britain revealed plans to cut taxes and boost spending. The pound fell to a low of 1.0349 per US dollar in early trade, its lowest level against the dollar in 40 years.
However, it improved slightly later and it was at 1.0671 per dollar with a weakness of 2.3 percent. In fact, after the tax cut plan came out, there have been concerns that it will increase public borrowing and may lead to recession, which will further increase the cost of living of the people.
The pound is currently trading at levels seen in the early 1980s. However, other currencies have also weakened against the dollar during this period as the US central bank has recently increased interest rates to deal with inflation.
Japan’s currency yen also saw a decline against the dollar last week, after which Japan’s central bank intervened and slowed down the pace of decline in the yen.
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