Pound falls further as borrowing costs rise again

Published On Jan 13, 2025, 5:52 AM

The British pound has dropped to its lowest value against the US dollar since November 2023, hitting $1.21. This decline follows a rise in government borrowing costs, with the yield on the 10-year gilt reaching 4.89%, its highest since 2008, and the 30-year gilt at 5.5%, a 27-year high. Analysts attribute the pound's fall partly to decisions made in the UK Budget, which they believe have exacerbated inflationary pressures. Global factors, notably the re-election of Donald Trump and strong US jobs data, have also influenced market sentiments, causing investors to expect interest rates to stay elevated longer.