The Pound fell to its lowest level against the dollar since 1985 today on the back of the US currency’s rising strength and the UK’s gloomy economic outlook.
The Sterling plummeted to $1.1407 and is currently at 1.1448.
The dollar has been growing in strength over recent days, hitting a 24-year high against the Japanese yen earlier on Wednesday.
Meanwhile, the dollar has also strengthened to a near 20-year high against the Euro.
The US Federal Reserve’s hawkish stance on interest rates, alongside the country’s quantitative tightening, have served to send the dollar’s value higher at a time of market uncertainty.
“While UK-based investors will be well aware of how weak the pound is against the US dollar, … sterling is not the only currency whose decline against the greenback is gathering pace,” said AJ Bell investment director Russ Mould.
“The DXY index, which measures the value of the dollar against six major currencies, stands at its highest level since 2002. Investors need to keep a close eye on this, because periods of marked dollar strength in the past have seen chaos in emerging markets, but also weakness in developed market stocks and commodity prices for good measure.”
“The US Federal Reserve’s interest rate increases and acceleration this month of its quantitative tightening programme are, respectively, increasing the returns available on dollars relative to other currencies and at the same time draining dollars from the global economy, to almost create a shortage of bucks.”