HomeFinancial MarketsPound Crashes Again After Bank of England Rules Out Emergency Intervention

Pound Crashes Again After Bank of England Rules Out Emergency Intervention

It turns out the recovery of the British Pound was short-lived as the currency started trending back to historic lows against the U.S. dollar once again. This came after the Bank of England (BOE) and the UK Treasury ruled out an emergency intervention to stop the pound’s plunge.

Last week, British finance minister Kwasi Kwarteng unveiled the government’s plans to make historic tax cuts and increase spending in an attempt to bolster the country’s economic growth. But the announcement prompted a quick sell-off that saw the pound take a sharp dive on Friday.

Early on Monday, the pound hit a historic low against the U.S. dollar at $1.0327 but managed to recover after chatter that BOE will step in to stop the fall. It was rumored that one of the measures might be an emergency increase in interest rates, but that wasn’t the case.

Instead, BOE issued a statement in which it said that the ongoing developments in financial markets are being monitored “very closely” However, the UK’s central bank ruled out any immediate reaction and instead plans to make a “full assessment” at a meeting in November.

The UK Treasury and minister Kwarteng also tried to calm the investors on Monday but ruled out short-term moves.

“The fiscal plan will set out further details on the government’s fiscal rules, including ensuring that debt falls as a share of GDP in the medium-term,” UK Treasury stated.

After bouncing back from $1.0327 to $1.0915 on Monday, the lack of intervention sent the currency on a downward trajectory to $1.0699.

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