Pound Sterling sinks as the UK finance minister sacked

AFP , Friday 14 Oct 2022

The pound plunged against the dollar Friday on the sacking of finance minister Kwasi Kwarteng in response to a budget that sparked markets chaos.

Kwasi Kwarteng
Britain s former Chancellor of the Exchequer Kwasi Kwarteng waves to the media as he leaves 11 Downing Street after being sacked by Prime Minister Liz Truss in London, Friday, Oct. 14, 2022. AP

 

Sterling sank 1.2 percent to $1.1188 after Prime Minister Liz Truss dismissed the chancellor of the exchequer.

The yield on the 10-year UK government bond dipped to 3.98 percent. It had hit 4.64 percent Tuesday amid uncertainty over Kwarteng's future.

"Truss is attempting to restore credibility in her administration by firing Kwarteng amid the market mayhem," said Interactive Investor analyst Victoria Scholar.

His unnamed successor will be Britain's fourth finance minister in as many months after Rishi Sunak resigned and his successor Nadhim Zahawi was not retained by Truss.

She edged out Sunak in the battle to succeed Boris Johnson as prime minister.

The pound had rallied Thursday on speculation over more U-turns over Kwarteng's controversial tax-slashing budget.

In the immediate aftermath of the budget in late September, sterling hit a record dollar-low close to parity.

Bond yields have meanwhile spiked since the budget -- that included a costly energy price freeze -- on fears of eye-watering levels of state debt.

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