The pound has dropped to its lowest value against the dollar since November 2023, with the latest figures showing it at $1.21 on Monday morning as the sell-off continues.
At the same time, government borrowing costs are on the rise. The yield, which represents the rate at which the government can borrow money, has reached its highest level since 2008, indicating increased borrowing costs for the UK.
Globally, many countries are experiencing rising borrowing costs, but some analysts believe that recent decisions made in the Budget have left the UK particularly exposed. Generally, governments borrow money by selling bonds to large investors, known as gilts in the UK.
Specifically, the yield on the 10-year gilt has climbed to 4.86%, marking its highest level in 17 years, while the 30-year gilt has risen to 5.42%, the highest in 27 years.
Government debt costs in Germany, France, Spain and Italy also rose on Monday.
Some experts say investors are reacting to the re-election of former US President Donald Trump and his talk of tariffs.
There is concern this will lead to inflation being more persistent than previously thought, and therefore interest rates will not come down as quickly as expected, both in the US and elsewhere.
BBC News
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