UK political upheaval and stagflation fears weigh on pound
Political uncertainty and growing economic woes, including spiralling inflation and the threat of a recession, are weighing heavily on the British pound, against both the U.S. dollar and the also struggling euro.
The British currency is a barometer of the U.K.'s attractiveness to international investors and has dropped to levels last seen in early 2020 and the shock of the COVID-19 outbreak.
Before that, sterling has not been so cheaply traded since 1985.
Many currencies are struggling against the greenback, which has been galvanised by the US Federal Reserve's stated intention to continue raising its key rates.
European currencies are also suffering from the war in Ukraine and the energy crisis, currently heightened by the threat of a total interruption of Russian gas deliveries.
But the pound is particularly badly hit, losing more than 15 percent against the dollar over the past year.
That has occurred despite the Bank of England (BoE) beginning to raise its key rates at the end of 2021 and repeatedly indicating that it intends to continue this tightening.
Against the euro, which has been weighed down by the European Central Bank's difficulties in tightening its monetary policy, the pound has fallen by two percent this year.
The U.K. has the highest inflation in the G7, at more 10 percent year-on-year. The BoE estimates that it could rise to 13 percent in October.
Private bank analysts are even more pessimistic: Citi estimates that the peak could reach 18.6 percent in early 2023, while Goldman Sachs suggests 14.8 percent.
However, inflation could hit 22.4 percent next year if the country's energy prices - which are set to jump 80 percent...