Home Business NewsBusiness Sterling hits record low against the dollar

Sterling hits record low against the dollar

by LLB Reporter
26th Sep 22 11:08 am

The market’s continuing verdict on the mini-Budget which turned out to be anything but mini couldn’t really have been any more savage as sterling hit an all-time low against the dollar.

The sceptre of parity against the dollar, which felt far off just a week ago, now feels dangerously close.

AJ Bell investment director Russ Mould said: “Amid talk of an emergency rate rise from the Bank of England, the FTSE 100 tried to rebound on Monday but quickly lost strength.

“When the pound is weak it lifts the relative value of the overseas earnings which dominate the index. More instructive is the performance of the more domestic-facing FTSE 250 which remained under pressure and slipped to its lowest levels since 2020.

“The problem for the new Government is the growth it hopes to engineer through tax cuts is unlikely to come through that quickly while the reduction in the buying power of the pound will effectively import more inflation at a time of already acute inflationary pressures.

“Government borrowing costs are also going through the roof – a key question facing investors in the face of all this is can and will Truss, Kwarteng and co. hold their nerve.

“In a sign of the nervousness pervading the UK market and UK assets, property investor LXI REIT pulled out of a £500 million deal, struck just last week, to buy supermarket property from Sainsbury’s.

“The tenor of the brief announcement hints that shareholders weren’t prepared to stump up the cash to fund the transaction given the current market storm.”

Leave a Comment

You may also like


Sign up to our daily news alerts

[ms-form id=1]