The British pound tanked against the U.S. dollar, hitting a record low on Monday as the exchange market reacted to the UK's biggest tax cuts in 50 years. The move was announced by new chancellor Kwasi Kwarteng late last week - while also unveiling plans to increase government borrowing and spending.
The initial fall on Friday (3.6 percent) was the third-worst day for the currency since Black Wednesday in 1992, and can only be topped by the day after the Brexit referendum result (-8.1 percent) and after the initial pandemic shock in 2020 (-3.7 percent). Combining to worsen the current state of the pound is the soaring dollar. A traditional safe-haven currency, USD investments have been rising during the current period of great global uncertainty. This has led to experts seeing the prospect of pound/dollar parity as increasingly likely.
For now at least, however, a week after the chancellor's mini-budget announcement and subsequent intervention from the Bank of England and rebuke from the IMF, the pound has recovered to pre-announcement levels.