Zhitong Finance APP learned that the market speculated that the new British government's economic plan would put the country's fiscal limit, and the pound fell to its all-time low on Monday.
USD rose to a 20-year high against a basket of major currency indexes, reaching 114.58 for the first time since May 2002, and then fell back to 113.73, up 0.52% from last weekend. The pound fell 4.9% to its all-time low of $1.0327, and then stabilized at around $1.05405, 2.9% lower than the closing price of the previous trading day.
Last Friday, the new British Finance Minister Kwasi Kwarteng announced a tax cut worth 45 billion pounds, including the cancellation of the plan to raise corporate tax to 25%, the cancellation of the maximum tax rate of 45%, and a significant reduction in stamp duty. It is reported that the scale of this tax cut exceeded the tax cuts introduced during the administration of Mrs. Thatcher in 1988, and was the largest in half a century. Tax cuts with the largest borrowing increase. Chris Weston, head of research at Pepperstone, said: "The pound is suffering an absolute blow. Investors are waiting for the Bank of England's response and believe such a move is unsustainable."
Commonwealth Bank International Economic Director Joseph Capurso wrote in a note: "The bad situation in the UK has exacerbated support for the US dollar, and the US dollar may rise again this week. If the sense of crisis in the world economy further intensifies, the US dollar may soar sharply."
On Monday, Japanese Finance Minister Shunichi Suzuki reiterated that the authorities are ready to deal with foreign exchange speculation. The risk-sensitive Australian dollar fell to $0.6487, its lowest since May 2020 to $0.6516. The Canadian dollar, which is also an commodity currency, hit a new low of 1.3625 Canadian dollars, the lowest level since July 2020.
