Saudi Press

Saudi Arabia and the world
Friday, Aug 21, 2026

Pound plunges to its lowest level in over 30 years

Pound plunges to its lowest level in over 30 years

The pound has fallen to its lowest level against the dollar since 1985, as the spread of the coronavirus pandemic spooks investors.

It is currently trading at $1.15, a fall of almost 5% in just one day.

It comes as financial markets tumbled again after major stimulus plans failed to quell fears about the economic impact of the virus.

The Dow ended down 6.3%, while the S&P 500 fell 5.1% and the Nasdaq dropped 4.7%.

Earlier the Dow and S&P 500 had plunged more than 7%, triggering an automatic temporary halt to trade, but shares recovered some ground as Congress appeared set to approve a relief bill.

The pound's weakness could partly stem from questions over how the UK government plans to pay for the emergency economic measures it has introduced, says Neil Wilson, chief analyst for Markets.com.

"This is the worst sustained period of sterling selling that I can recall," he says. "The government's massive fiscal package undoubtedly means more borrowing for the UK economy - how do we pay for all this?"

Meanwhile, the FTSE 100 index of top UK firms closed down 4%, with aerospace and travel firms among the hardest hit.


'Economic fight'

UK Chancellor Rishi Sunak revealed a £350bn stimulus package for UK firms on Tuesday, including £330bn of business loan guarantees.

It included aid to cover a business rates holiday and grants for retailers and pubs, while help for airlines is also being considered.

Despite this, investors are still flocking to the comparatively safer dollar, says Ranko Berich, head of Market Analysis at Monex Europe.

"The UK's response to the incoming coronavirus shock has been about as aggressive as possible in terms of monetary and fiscal policy, but this has done nothing to help sterling.

"Idiosyncratic factors such as the UK's monetary and fiscal response or Brexit are beside the point: this is about the US dollar, which is proving unstoppable as global financial markets stare into the abyss of crisis-like conditions," he said.

Investors say rescue measures can only blunt the pain, as countries close borders and order mass closures, bringing most economic activity to a halt.

The US on Tuesday outlined a $1tn (£830bn) proposal to support the world's biggest economy, which is expected to include direct payments to families, small business assistance and bailouts for airlines and other industries.

In the US, large companies have already announced more than 3,600 job cuts or furloughs, according to research firm Challenger, Gray & Christmas. The firm said some nine million other jobs at local bars and restaurants could also be at risk.

Car factories in the UK and elsewhere have halted production, while the slowdown has pushed other firms such as Laura Ashley and Flybe into administration.

Concerns about the damage have spurred a widespread sell-off. France's CAC 40 fell more than 6% while Germany's Dax dropped more than 5%.

Oil prices also plunged to levels not seen since the early 2000s, as demand contracts sharply, but exporters boost supply. The declines have even hit gold and government debt, which are typically considered less risky assets.

Asian markets have fared better than the US and Europe in recent days, but were also lower. Japan's benchmark Nikkei 225 ended Wednesday 1.7% lower, the Hang Seng in Hong Kong fell by 3.3%, and China's Shanghai Composite lost 1.8%.

Sterling's fall to a 35-year low against the dollar is clearly troubling.

It is down 12% since the beginning of last week, and 5% today alone. This is partly down to the strengthening dollar, due to its status as a "safe haven," the inevitable result of global volatility in financial markets amid the Coronavirus pandemic.

But those aren't the only reasons for sterling's weakness. The pound has sunk to to just over €1.06 against the euro- its lowest level since the depth of the financial crisis 11 years ago.

The pound is likely to be at a record low on measures of its global value, to be calculated tomorrow.

At the same time, UK government borrowing costs are creeping up, with the presumption these would stay "lower for longer" now being tested in global debt markets.

Traders have raised a range of reasons for why the UK is being particularly singled out for attention.

There is growing expectation of ever bigger fiscal injections to combat the economic impact of the pandemic and the UK is still very dependent on foreign flows of capital.

Its strategy for dealing with the pandemic was seen, say traders, as an outlier amongst the world's major economies.

Then there is Brexit. The UK has the extra economic challenge of dealing with a fundamental change to trading arrangements with the EU, perhaps on WTO tariffs, in the middle of this pandemic.

It is a very rough market out there, with some markets a little dysfunctional as traders are isolated away from their trading floors. But the UK is being singled out for especially tough treatment.

Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Cristiano Ronaldo and Georgina Rodríguez Sign Prenup Protecting Their Separate Fortunes
Google Launches Pixel 11 With Gemini AI at the Center of Its Hardware Strategy
Turkish Parliament Passes Landmark Bill Granting Conditional Amnesty to Disarmed PKK Members
Jorge Messi, Lionel Messi’s Father and Longtime Agent, Dies at 68
AI’s Next Bottleneck Is Power, Not Just Nvidia Chips
Meta Raises AI Spending Target to as Much as $145bn Despite Pressure Over Returns
Joe Biden’s Cancer Has Spread Beyond His Bones, Hunter Biden Says
Why 2027 Could Be a Strong Year for Stocks—and Why the Forecast Is Fragile
Why Markets May Look Quiet in August After Big Tech Earnings
Trump’s Top General Seeks an Exit Strategy From Iran War, Report Says
Brock Lesnar Retires From Wrestling, Closing a Career of Rare Athletic Range and Lasting Controversy
UFO: Pentagon Releases Video of Unidentified Object Tracked Over Middle East
Ukraine Tells Senate Republicans Its Drone War Offers a Blueprint for America
Weight-Loss Drug Boom Tests the Limits of Prescription Advertising Rules
Saudi Arabia, Turkey and Pakistan Sign Mutual-Defence Pact
AI Is Remaking the US Economy, From GDP Growth to iPhone Prices
A SpaceX Rocket Is About to Crash Into the Moon — and Scientists Hope to Watch
Modern Slavery Decisions Broaden the Al Fayed Inquiry’s Frame
FIFA’s Retreat Leaves a Larger Question Over Who Guards the Game
Finland Deploys Commercial-Scale Thermal Batteries Using Crushed Rock to Store Renewable Grid Energy
Valued at $109 Million: F-35B Fighter Jet Crashes in Southern California
US Says It Has Carried Out Heavy Strikes on Iran After Attempted Attacks on Its Forces
Over 24 Hours in the Air: Qantas Airbus Completes Record-Breaking Test Flight
Arrest Warrant Issued in Lebanon for Tycoon Spotted Meeting Netanyahu in Washington
Trump says Israel ‘would not survive’ without US
Nvidia Reportedly Takes Vast Texas Data-Centre Lease to Underwrite AI Expansion
FIFA’s Private-Investment Plan for World Cup Rights Draws European Revolt
Following OpenAI's Cyberattack: 'Most Companies Still Do Not Understand What Is Coming'
OpenAI Sued After ChatGPT Allegedly Discouraged Emergency Care Before Near-Fatal Embolism
Miliband Sets Climate and International Law at Centre of UK Diplomacy
Pentagon Discloses Nearly 100 US Troop Injuries During Renewed Iran Fighting
Trump Readies New Tariffs as Temporary Global Levy Nears Expiry
High Prices Push Coffee Drinkers Toward Whole Beans and Home Brewing
Trump Draws Boos and Podium Scrutiny at Spain’s World Cup Triumph
Spain Defeats Argentina in Extra Time to Win Second World Cup
Turkey Explores S-400 Transfer to UAE in Bid to Rejoin F-35 Program
US Retaliates Against Iran After Two American Troops Killed in Jordan
Proposed U.S.-Saudi Nuclear Pact Could Permit Limited Uranium Enrichment Under International Safeguards
Why Kentucky Fried Chicken Became KFC—and Why the False Explanations Persist
Iran Claims It Destroyed Bahrain’s Main Artificial Intelligence Center in Missile and Drone Strike
Ukrainian Drones Strike Wildberries Warehouses Deep Inside Russia
Reported CIA Mission Helped Clear the UAE’s Path to Advanced US AI Chips
Artificial Intelligence Capital Fuels Markets While Governments and Regulators Face Mounting Strategic Tests
China’s Moonshot’s Kimi K3 Narrows the Gap With Anthropic Through Scale, Openness and Lower Cost
Gold and Cash Seizure Puts Indonesia’s Senior Anti-Corruption Prosecutor Under Investigation
The Ledger Will Not Trust on Faith
Passenger Bound for Germany Refused to Sit Beside a Woman on a Plane — Then Slapped a Flight Attendant
Ukraine’s Leadership Rift Spills Into the Streets as Protesters Target Army Chief
The Ten World Cup Finals That Defined Football History
Smartphones Are Getting More Expensive, Sales Are Collapsing, and Even Apple Admits: "Prices Will Rise"
×