The pound falls again after the Bank of England released a tax cut budget statement

A British one pound coin sits next to a US dollar bill in this arranged photo taken in London, UK. Photographer: Jason Alden/Bloomberg

The Bank of England has issued a statement after the pound’s value plummeted (Image: Getty / Bloomberg)

The pound tumbled again this afternoon after the Bank of England issued an emergency declaration.

It has said it is “monitoring” developments in the markets as Stirling fell to its lowest level in 50 years this morning.

Shortly after the announcement, the price was around $1.06.

The bank added that it “wouldn’t hesitate to change interest rates” to bring inflation back to the 2% target.

A full statement released today by Bank of England Governor Andrew Bailey said: “The Bank is closely monitoring developments in financial markets amid the significant repricing of financial assets.

“In recent weeks the government has made a number of important announcements.

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Economy ahead of latest UK CPI numbers

The pound fell again this afternoon (Picture: Getty)
Bank of England Governor Andrew Bailey made an emergency call this afternoon (Credits: PA)

“The government’s energy price guarantee will reduce the near-term peak in inflation. Last Friday, the government announced its growth plan, on which the Chancellor gave further details in her statement today.

“I applaud the government’s commitment to sustainable economic growth and the role of the Office of Fiscal Responsibility in its assessment of the outlook for the economy and public finances.

“The role of monetary policy is to ensure that demand does not exceed supply in a way that leads to more inflation over the medium term.

‘As the MPC has made clear, at its next scheduled meeting it will make a full assessment of the impact on demand and inflation of the government’s announcements and the fall in sterling and will act accordingly.

‘The MPC will not hesitate to change interest rates as needed to bring inflation back to the 2% target in a sustainable manner over the medium term, in line with its mandate.’

It comes after a major drop after this week’s ‘mini-budget’, sterling fell more than 4% in early Asian trading markets before regaining some ground.

That was about $1.03 per pound before recovering a bit to about $1.05.

That’s the currency’s lowest rate since 1971 – and now many fear it could reach parity with the dollar.

The drop will impact consumers and the UK economy as goods bought abroad, particularly in the US, are now costing businesses and the government more money, along with borrowing.

Questions from the Prime Minister

Chancellor Kwasi Kwarteng delivered a mini-budget speech to Parliament last week (Image: PA)
It comes after the pound fell to an all-time low earlier today (Picture: Getty Images)
The pound sterling is worth its lowest rate since decimalization (Image: Getty)

Tourists are also likely to face higher prices abroad, while the AA last week – ahead of the latest drop – said drivers were facing bills of around £5 a tank of petrol at pumps because of the weak pound.

This is partly the result of a strong dollar, with the euro hitting a fresh 20-year low amid recession and energy security fears, exacerbated by the Ukraine war. But the pound has been hit far harder than most.

The latest drop comes after new Chancellor Kwasi Kwarteng hinted that more tax cuts would follow those he announced last week, seemingly further weakening confidence.

Earlier Monday, sterling slipped nearly 5% to $1.0327 – building on fresh 1985 lows seen on Friday after Kwarteng unveiled them largest tax cut program in 50 years.

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Justin Scacco

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