The Pound is falling freely. Overview for 26.09.2022

The Pound Sterling dropped against the USD to the lowest levels since 1985. The current quote for the instrument is 1.0740.

The Pound got under pressure from two sides simultaneously - the strong “greenback” and decisions made by the British regulator.

The USD has an extremely strong influence on the British currency which can hardly be avoided. As along as the capital markets are escaping from risks, this factor will remain effective.

Domestic news doesn’t improve risk attitude. Earlier, the British chancellor announced a £45-billion tax cut package, which is expected to be the biggest in the last 50 years. The package will be financed from selling government bonds to compensate for electricity expenses for the country’s population and companies.

The government bears some of the expenses, admitting severe complications in the financial conditions. However, market players are absolutely not confident whether it will work.

At the same time, there is a parallel story with the Bank of England, which, under the circumstances, should raise the benchmark interest rate by 100 basis points or more, but evidently is not ready for such a move.

Investor are trying to buy out some of the emotional sales of the British currency, but the overall situation is clearly against the Pound.