🔍GBP/USD 🔍⚠️ UPDATE⚠️fundamental analysis:
The sell-off in UK assets went into overdrive on Monday, sending the pound to an all-time low, slamming government bonds, and sparking talk of emergency action by the Bank of England.
The market mayhem extended the damage seen on Friday in the wake of the government’s new fiscal measures, which sent investors into a panic. The plunge in UK gilts sent 10-year yields above 4% for the first time since 2010. Sterling dropped to as low as $1.0350, taking it closer to parity with the dollar, though it subsequently erased its loss, to trade as strong as $1.0931.
The tumble comes in the wake of the government’s shock tax-cutting budget late last week, which will fuel inflation and increase borrowing at a time of rapidly rising interest rates. It’s led to a market crisis that’s threatening to engulf Prime Minister Liz Truss’s days-old administration as the country grapples with a cost-of-living crisis and a recession.
