The pound is headed for its worst weekly losses in six years, as investors continue to dump UK assets in response to Rachel Reeves’s Budget.
The value of sterling has fallen 0.4pc against the dollar this week, marking the currency’s fifth consecutively weekly decline and longest stretch of losses since December 2018.
Sterling stabilised today after several volatile trading sessions, increasing one basis point to $1.29.
The decline comes despite traders betting on the Bank of England making fewer interest rate cuts next year.
Expectations of higher interest rates normally push up the value of the pound. However, the Chancellor’s plans to increase the UK’s tax burden by £40bn has sparked concerns about inflation and growth.
“The market sees the heavy spending in the budget as possibly stagflationary, judging from the sharp rise in UK rates,” Saxo Bank analysts said.
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