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The pound has reached an all-time low against the dollar.

Sterling fell to a record low on Monday as traders fled over fears that the incoming government’s economic plan will strain Britain’s finances to the breaking point.The sharp collapse in the British pound aided the safe-haven US dollar to a fresh two-decade high against a basket of major rivals.

Sterling fell as high as 4.9% to an all-time low of $1.0327 before settling around $1.05405, or 2.9% lower than the previous session’s close.It fell 3.6% on Friday as new Finance Minister Kwasi Kwarteng announced historic tax cuts supported by the largest increase in borrowing since 1972. more info

“Sterling is getting completely battered,” said Chris Weston, Pepperstone’s head of research.”Investors are waiting for the Bank of England to respond. They claim that this is not sustainable.”On simmering recession fears, the euro also hit a new 20-year low against the dollar, as the oil crisis stretches into winter and the Ukraine war escalates. In Italy, a weekend election was similarly expected to drive a right-wing alliance to a comfortable majority in parliament. more info

Following the shock of last week’s currency intervention by Japanese authorities, the dollar built on its rebound versus the yen, as investors shifted their focus to the contrast between a hawkish Federal Reserve and the Bank of Japan’s insistence on adhering to large stimulus.

The dollar index, which includes the pound, euro, and yen, rose to 114.58 for the first time since May 2002 before falling to 113.73, 0.52% higher than the end of last week.”The dismal scenario in the UK exacerbates support for the USD, (which) may track higher again this week,” Commonwealth Bank of Australia’s head of international economics, Joseph Capurso, wrote in a research.

“If there is a perception of global economic disaster, the USD might rise dramatically.”Europe’s common currency fell as low as $0.9528 before closing down 0.41% at $0.96545.

The dollar gained 0.39% to 143.95 yen, resuming its ascent toward Thursday’s 24-year high of 145.90. It fell to 140.31 the following day as Japan executed its first yen-buying intervention since 1998.On Monday, Japanese Finance Minister Shunichi Suzuki reiterated that authorities were prepared to respond to currency speculative activities.

The risk-sensitive Australian dollar fell to $0.6487, its lowest level since May 2020, and was last trading 0.22% lower at $0.6516.The Canadian dollar, another commodity currency, fell to a new low of C$1.3625 per greenback, its lowest level since July 2020.

The offshore yuan of China fell to a new low of 7.1630 per dollar, the lowest since May 2020.The People’s Bank of China announced on Monday that it will reestablish foreign exchange risk reserves for some futures contracts, making betting against the yuan more expensive in attempt to moderate the pace of recent devaluation.