Pound sterling falls to lowest level in 14 months amid bond market turmoil
Date
1/12/2025 3:02:20 AM
(MENAFN) The pound sterling has fallen to its lowest level in 14 months, trading at approximately USD1.226 in early London trading. This decline comes amid concerns over the UK’s increasing borrowing costs and a global bond market sell-off that continues to shake investor confidence. The drop in the pound represents its weakest performance since November 2023, driven by growing anxiety surrounding UK assets as borrowing costs reach historic highs.
The UK’s 10-year borrowing costs have surged to their highest levels since 2008, while 30-year bond yields have climbed to levels not seen since 1998. This sharp increase in borrowing costs has heightened market concerns about the sustainability of the UK’s public finances, especially as the US dollar strengthens on the global stage. These developments have added to fears that the UK economy could face significant financial strain.
In response to the escalating situation, Shadow Chancellor Mel Stride raised an urgent question in the House of Commons, drawing attention to the mounting pressure on the government’s fiscal outlook due to the higher borrowing costs. The question, directed to Chancellor Rachel Reeves, was answered by Darren Jones, the chief secretary to the treasury, who addressed the issue in her absence.
During the session, Jones acknowledged the market turbulence but reiterated the government's policy of not commenting on specific market movements, emphasizing that bond yield fluctuations are influenced by a variety of factors, both international and domestic. Despite this, the lack of reassurance sparked calls from MPs for urgent government intervention to address the growing concerns about the country's fiscal strategy.
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