Slumping Pound, Soaring Yields Show Mammoth Task for UK’s Truss
- The pound has fallen about 15% against the dollar this year
- Gilt yields are surging as rate-hike expectations shoot higher
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A currency near the lowest in decades, an unprecedented surge in government borrowing costs and record underperformance in domestic stocks -- such is the dismal scene in markets that awaits Liz Truss, Britain’s new prime minister.
The pound, already down about 15% this year versus the dollar, just posted its worst monthly performance since the 2016 Brexit vote. Meanwhile, borrowing costs for businesses have jumped after six back-to-back rate hikes by the Bank of England, while expectations of further increases have shot up amid warnings that inflation will spiral further out of control.