Sterling on Wednesday plummeted to its lowest level against the U.S. dollar in nearly 40 years.
Yesterday, the British pound dropped to $1.1407, a level not seen since 198 as investors monitor Liz Turss’ upcoming final details for her plans to bail Britain out of the energy crisis and high inflation, which could add more than 100 billion pounds ($115 billion) to the country’s borrowing if the plans go through.
Truss, the new British prime minister, officially took the helm on Tuesday amid an ongoing crisis that some said is the challenging task since post WW2.
The last time the British pound fell to $1.14 happened briefly in March 2020 during the pandemic shock and the Brexit memorandum result in 2016. Meanwhile, sterling at the level of $1.1407 has not been seen since 1985 during Margaret Thatcher’s government.
According to the report by Reuters citing a source familiar with the situation, Truss is considering a plan to freeze energy bills that could cost up to 100 billion pounds.
Meanwhile, Deutsche Bank stated that the energy price support and the promised tax cuts proposed by the new prime minister could cost 179 billion pounds, which is about half Britain’s historic pandemic spending that dealt a blow to the country’s public finances.
