The British pound continued to face sell-off pressure on Wednesday after slipping to a two-year low against the US dollar on the news that Sajid Javid and Rishi Sunak, senior members of the UK cabinet, had resigned, and more minor departures came thick and fast.
The pound dropped as much as 1.8 per cent against the dollar to 1.1899 on Tuesday — its lowest level since March 2020. Sterling pared back some of its losses on Wednesday and was trading at 1.1922 at 11.42am UK time, according to Bloomberg.
“After a brutal session, sterling is recovering some of its losses today,” Naeem Aslam, chief market analyst at Avatrade, said in a note on Wednesday.
“Yesterday was one of the worst days for sterling since February this year as the price briefly violated the support of 1.19 against the dollar.
“Looking at the GBP/USD price action today, it is very clear that the sell-off is still not clear and it is highly possible that we will see the sell-off again. But for now, traders are booking some profits and this has pushed sterling higher today.”
Mr Sunak and Mr Javid resigned from their positions as Chancellor of the Exchequer and health secretary on Tuesday night, piling more pressure on embattled Prime Minster Boris Johnson to step down.
The resignation of Mr Sunak could create more uncertainty for the weakening pound and the UK economy amid soaring inflation, Brexit concerns and fears of recession, Mr Aslam said.
Sir Jon Cunliffe, deputy governor of the Bank of England, sought to reassure markets that the monetary authorities would quash inflation before it becomes rampant in the system on Wednesday.
“We will do whatever is necessary to ensure that as this period of inflation goes through the economy, it does not leave us with a persistent domestically generated inflation problem,” the policymaker said. “We will act to make sure that doesn't happen.”
Mr Johnson’s appointment of Nadhim Zahawi as the new Chancellor may also fail to ease market jitters, Mr Aslam said.
“This is because, with the appointment of a new cabinet, it could mean a set of new policies and a lot of unanswered questions,” he added.
“Rishi Sunak did a good job during the Covid crisis by keeping the UK’s economy from a complete disaster and the public had somewhat confidence in his abilities to bring the UK economy out of the current recessionary environment.”
In May, inflation in the UK hit an annual rate of 9.1 per cent — a new 40-year high — driven by a broad range of price increases, including for fuel, electricity and food.
On Tuesday, the Bank of England said the economic outlook for Britain and the world had darkened and told banks to ramp up capital buffers to ensure they could weather the storm.
It also said it would conduct an in-depth analysis to enhance surveillance of “opaque” commodity markets after Russia's invasion of Ukraine left the central bank without a full picture of risks and vulnerabilities.
“In addition to this, the Brexit agreement is once again in jeopardy as Boris Johnson wants to walk away from some of the deals agreed with the EU about Northern Ireland, which created a risk of a trade war,” Mr Aslam said.
“Now with the new cabinet and his new team players, traders are more concerned about the government's Brexit stance.”
Meanwhile, the strong dollar was partly to blame for the pound's fall on Tuesday, according to Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“The political turmoil in the UK certainly added to the selling pressure on the sterling, however, the reason why cable slipped below the 1.20 mark was a booming US dollar, across the board,” Ms Ozkardeskaya said.
The dollar — the world's reserve currency — surged to its strongest level in more than two years on Tuesday as concerns about recession prompted investors to pile into safe-haven assets, Bloomberg reported.
The pound is down almost 12 per cent against the dollar year-to-date, Edward Bell, senior director of market economics at Emirates NBD said in a note.
“We had cautioned a few weeks ago that our Q3 targets for GBP/USD at 1.20 … would be upside caps on prices and the disorderly sell-off in currency markets overnight with limited policy responses shores up our view,” Mr Bell said.
“We expect that the US dollar will remain a relative outperformer thanks to policy differentials favouring the greenback as well as investors seeking it as a haven asset.”
However the pound could fall even further this week, Vijay Valecha, the Dubai-based chief investment officer at Century Financial, said.
“Worries about the recession continue to loom as central banks move to fight multidecade-high inflation with higher interest rates, risking triggering an economic slump by pulling down demand,” he said.
“We could see sterling test the 1.1850 to 1.1900 level this week.”
F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
UAE currency: the story behind the money in your pockets
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
ENGLAND SQUAD
Goalkeepers: Jack Butland, Jordan Pickford, Nick Pope
Defenders: John Stones, Harry Maguire, Phil Jones, Kyle Walker, Kieran Trippier, Gary Cahill, Ashley Young, Danny Rose, Trent Alexander-Arnold
Midfielders: Eric Dier, Jordan Henderson, Dele Alli, Jesse Lingard, Raheem Sterling, Ruben Loftus-Cheek, Fabian Delph
Forwards: Harry Kane, Jamie Vardy, Marcus Rashford, Danny Welbeck
The specs
Engine: 3.0-litre six-cylinder turbo
Power: 398hp from 5,250rpm
Torque: 580Nm at 1,900-4,800rpm
Transmission: Eight-speed auto
Fuel economy, combined: 6.5L/100km
On sale: December
Price: From Dh330,000 (estimate)
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
The specs: 2018 Mercedes-Benz E 300 Cabriolet
Price, base / as tested: Dh275,250 / Dh328,465
Engine: 2.0-litre four-cylinder
Power: 245hp @ 5,500rpm
Torque: 370Nm @ 1,300rpm
Transmission: Nine-speed automatic
Fuel consumption, combined: 7.0L / 100km
The National Archives, Abu Dhabi
Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.
Much of the material can be viewed on line at the Arabian Gulf Digital Archive - https://www.agda.ae/en
A little about CVRL
Founded in 1985 by Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, the Central Veterinary Research Laboratory (CVRL) is a government diagnostic centre that provides testing and research facilities to the UAE and neighbouring countries.
One of its main goals is to provide permanent treatment solutions for veterinary related diseases.
The taxidermy centre was established 12 years ago and is headed by Dr Ulrich Wernery.
'Nightmare Alley'
Director:Guillermo del Toro
Stars:Bradley Cooper, Cate Blanchett, Rooney Mara
Rating: 3/5
The specs: 2018 Harley-Davidson Fat Boy
Price, base / as tested Dh97,600
Engine 1,745cc Milwaukee-Eight v-twin engine
Transmission Six-speed gearbox
Power 78hp @ 5,250rpm
Torque 145Nm @ 3,000rpm
Fuel economy, combined 5.0L / 100km (estimate)
How much do leading UAE’s UK curriculum schools charge for Year 6?
- Nord Anglia International School (Dubai) – Dh85,032
- Kings School Al Barsha (Dubai) – Dh71,905
- Brighton College Abu Dhabi - Dh68,560
- Jumeirah English Speaking School (Dubai) – Dh59,728
- Gems Wellington International School – Dubai Branch – Dh58,488
- The British School Al Khubairat (Abu Dhabi) - Dh54,170
- Dubai English Speaking School – Dh51,269
*Annual tuition fees covering the 2024/2025 academic year
Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
David Haye record
Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
if you go
The flights
Air Astana flies direct from Dubai to Almaty from Dh2,440 per person return, and to Astana (via Almaty) from Dh2,930 return, both including taxes.
The hotels
Rooms at the Ritz-Carlton Almaty cost from Dh1,944 per night including taxes; and in Astana the new Ritz-Carlton Astana (www.marriott) costs from Dh1,325; alternatively, the new St Regis Astana costs from Dh1,458 per night including taxes.
When to visit
March-May and September-November
Visas
Citizens of many countries, including the UAE do not need a visa to enter Kazakhstan for up to 30 days. Contact the nearest Kazakhstan embassy or consulate.
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At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
More from Rashmee Roshan Lall
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MATCH INFO
Wales 1 (Bale 45 3')
Croatia 1 (Vlasic 09')
Juliet, Naked
Dir: Jesse Peretz
Starring: Chris O'Dowd, Rose Byrne, Ethan Hawke
Two stars
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Killing of Qassem Suleimani
The bio
Job: Coder, website designer and chief executive, Trinet solutions
School: Year 8 pupil at Elite English School in Abu Hail, Deira
Role Models: Mark Zuckerberg and Elon Musk
Dream City: San Francisco
Hometown: Dubai
City of birth: Thiruvilla, Kerala
Gothia Cup 2025
4,872 matches
1,942 teams
116 pitches
76 nations
26 UAE teams
15 Lebanese teams
2 Kuwaiti teams
UAE currency: the story behind the money in your pockets
