The pound continues its decline on Monday and slipped to an all-time low against the dollar. GBP/USD hit lows below 1.0300 before rebounding to trade at 1.0700.
With such sharp declines, traders are now eyeing parity with the dollar as market show their distrust of the UK government recent fiscal plans.
“The pound has been on a fast downwards track of a rollercoaster, plunging to record lows yet again this morning, as confidence in the government’s economic management continues to evaporate,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.
The new UK chancellor unveiled a mini budget on Friday which was immediately met with volatility in UK assets. Having had the weekend to further digest the implications, traders took the first opportunity on Monday to sell the pound and take it to record lows.
“The weekend press tarred and feathered sterling with assertions of its emerging-market status,” said Marc Chandler, chief market strategist at Bannockburn Global Forex.
Indeed, with 400-pip swings in early on Monday, GBP certainly does have some characteristic of an emerging market currency.