The pound plunged 4.7% to a record low after Kwasi Kwarteng vowed to press on with more tax cuts, even as markets delivered a damning verdict on the new Chancellor of the Exchequer’s fiscal policies.
The bulk of the currency’s slide on Monday took place in a frantic 20-minute selloff, evoking cries of a flash crash by traders. The beleaguered currency fell to as low as US$1.0350, as investors punished the Chancellor for his unapologetic dash for growth. It was at US$1.0558 at noon in Tokyo.
The decline followed the release on Friday of the government’s “Growth Plan,” a budget in all but name and the biggest tax giveaway in half a century. If the rout continues and widens into broader markets, there’s a risk Prime Minister Liz Truss’s days-old administration may be pushed into a crisis that could force a rapid policy response.