The value of the pound has dropped to a record low against the dollar. The drop comes as the markets react to the biggest tax cuts in the UK for decades. The value of the pound had dropped to roughly $1.05 when the markets opened up this morning (September 26). Another reason for the drop in value of the pound is the increasing value of the dollar, which has in recent weeks increased the pressure on the pound. On September 23, Chancellor Kwasi Kwarteng announced £45 billion worth of tax cuts in a ‘mini-budget’ that also included a shake up of stamp duty and reversing the planned increase in national insurance. The plummet in value has led to some concerns that the pound could even be close to parity with the dollar by as early as the end of the week. One result of the weakened pound is that commodities that are imported, things such as oil and gas, will become more expensive. People from the UK visiting the USA will also notice that they will get less dollars for their pound sterling. Some leading investors believe that the Bank of England will be forced into action to prevent a further slide to the value of the pound. Stephen Innes, managing partner at SPI Asset Management told the BBC. "To stop the bleeding even temporarily, the Bank of England may well enter ‘whatever it takes’ territory to bring inflation down. An emergency meeting rate hike could happen as soon as this week to regain credibility in the market. We could even see a hike today."
