Pound falls to weakest level since 2023 amid UK market turmoil

The pound slid to $1.2280, its weakest level against the US dollar since November 2023, as concerns over the UK’s inflation and fiscal policies drove a sharp selloff in the nation’s assets. The decline comes despite UK bond yields reaching multi-decade highs, with 30-year yields hitting levels last seen in 1998 and 10-year yields at their highest since 2008. Analysts suggest the drop reflects investor fears of persistent inflation and doubts about fiscal sustainability, causing capital to leave the UK.

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The selloff has drawn comparisons to the market chaos under former Prime Minister Liz Truss in 2022, when the pound hit a record low and gilt yields surged, threatening pension funds. While market safeguards have since improved, traders worry the situation could worsen unless the government revises its fiscal plans. Rising borrowing costs are adding pressure on Chancellor Rachel Reeves, whose fiscal flexibility is being squeezed as the market turmoil deepens.