Pound Hits All-Time Low Against Dollar as Chancellor Announces Tax Cuts

Kwasi Kwarteng promised more tax cuts on top of a 45 billion pounds package that he announced last week on Friday.

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The British pound hit an all-time low over the weekend against the dollar after the United Kingdom government announced tax cuts and spending measures in Chancellor Kwasi Kwarteng's mini-budget, The Guardian reported on Monday, 26 September.

The chancellor has promised more tax cuts on top of a 45 billion pounds package that he announced last week on Friday, which seems to have undermined the market confidence in the UK.

"We've actually put more money into people's pockets. We're bringing forward the cut in the basic rate [of income tax] and there's more to come. I want to see over the next year, people retain more of their income, because I believe it's the British people that are going to drive this economy," he was quoted as saying by the BBC.

The Labour Party has said, however, that the cost-of-living crisis would not be solved by this plan, and has called the tax cuts a "plan to reward the already wealthy."

The pound nosedived in early trading on Monday, reaching $1.04. This is the lowest level of the pound against the dollar in the history of its existence.

Financial strategist Jane Foley, who works at Rabobank, said that investors have doubts about the government's package and overall plans regarding the economy.

"They're worried that some of these tax cuts that have been announced aren't going to be fully-funded. That will result in a large amount of debt at a time when the Bank of England is going to be selling some of its holdings of UK government debt," she said, as reported by the BBC.

(With inputs from The Guardian and the BBC.)