# Sterling slides below $1.15 for first time since 2020 Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-09-02 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Sterling Hits 2020 Low Against Dollar Amid Economic Woes Meta Description: Discover why the pound plummeted against the dollar to its lowest point in over a year as concerns over the UK economy grow. Stay informed with Reuters. URL: https://financedigest.com/sterling-slides-below-1-15-for-first-time-since-2020html ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-09-01t125008z1lynxmpei801q7rtroptp4britain-sterling-1736815304487-compressed.jpg) By Tom Wilson and Samuel Indyk LONDON (Reuters) -Sterling skidded against the dollar on Thursday to its lowest level since March 2020 as storm clouds gathered over the British economy and investors seek safety in the U.S currency. Adding to August losses that amounted to its worst month [since late 2016, the pound briefly slid as low as $1.1499, a new low since March](https://www.financedigest.com/the-nasdaq-100-on-track-to-have-its-best-week-since-march-2010.html "The Nasdaq 100 On Track to Have its Best Week Since March 2010") 2020 when COVID-19 hit markets. The British currency was last hovering just above that level at $1.1534, down 0.7% on the day. The pound lost 4.6% against the dollar last month in its worst performance since October 2016, and has fallen by nearly 15% this year, fuelled by concerns about [slowing growth in the British](https://www.financedigest.com/british-ev-startup-arrival-gets-300-million-funding-aims-to-slow-cash-burn.html "British EV startup Arrival gets 0 million funding, aims to slow cash-burn") economy as inflation soars into double digits Its closing [price on Wednesday was its weakest monthly close since](https://www.financedigest.com/biggest-uk-house-price-fall-recorded-since-financial-crisis.html "Biggest UK house price fall recorded since financial crisis") 1985, when it hit an all-time low of around $1.05. Currencies globally have been [falling sharply against the dollar](https://www.financedigest.com/dollar-falls-to-nine-month-low-as-powell-notes-progress-in-disinflation.html "Dollar falls to nine-month low as Powell notes progress in disinflation"), with the euro also down heavily on Thursday, but analysts say a combination of inflationary pressures, economic weakness and uncertainty about the policies of the new prime minister – who is due to be announced on Monday – has made the pound particularly vulnerable. British [inflation hit](https://www.financedigest.com/uk-shop-price-inflation-hits-record-8-in-january-brc-2.html "UK shop price inflation hits record 8% in January: BRC") 10% in July, its highest in 40 years, and is predicted to climb higher, squeezing the pay packages of hard-hit consumers further. British government bonds are suffering, too, enduring their [biggest monthly fall since](https://www.financedigest.com/uk-firms-plan-biggest-pay-rises-since-2012-to-fill-staff-gaps.html "UK firms plan biggest pay rises since 2012 to fill staff gaps") 1994. It seems like a bit of a perfect storm now for the pound,” said Viraj Patel, [global macro strategist at Vanda Research](https://www.financedigest.com/lumen-research-and-tvision-announce-global-partnership-for-advanced-attention-first-measurement-and-media-buying.html "Lumen Research and TVision Announce Global Partnership for Advanced Attention-First Measurement and Media Buying"). There’s also a Liz [Truss risk](https://www.financedigest.com/risk-of-uk-balance-of-payments-crisis-under-truss-is-rising-deutsche-bank-warns.html "Risk of UK balance of payments crisis under Truss is rising, Deutsche Bank warns") premium starting to get priced in. Clearly the market is not responding well to some of the [policies Truss has announced](https://www.financedigest.com/impact-com-announces-new-global-parental-leave-policy.html "impact.com announces new global parental leave policy"), especially the funding of the twin deficit in the UK,” London-based Patel added. Truss, currently foreign secretary, is the frontrunner to replace Boris Johnson as Britain’s [Prime Minister](https://www.financedigest.com/economist-odor-picked-as-slovakias-caretaker-prime-minister.html "Economist Odor picked as Slovakia’s caretaker prime minister"). August was also sterling’s worst month against the [euro since](https://www.financedigest.com/euro-zone-economy-sentiment-rises-in-dec-first-time-since-start-of-ukraine-war.html "Euro zone economy sentiment rises in Dec, first time since start of Ukraine war") May 2021. On Thursday it recovered 0.4% to 86.19 pence per euro, after earlier hitting its lowest in two months. The [pound’s problems have been compounded by a strengthening dollar](https://www.financedigest.com/dollar-slips-after-upbeat-china-data-euro-pound-rise.html "Dollar slips after upbeat China data; euro, pound rise"). The U.S. [dollar index which measures the greenback against a basket of currencies](https://www.financedigest.com/worst-not-over-for-em-currencies-as-u-s-dollar-thunders-on-reuters-poll.html "Worst not over for EM currencies as U.S. dollar thunders on: Reuters poll"), was last up 0.9% at 109.74. It earlier reached a new two-decade high of 109.99. The greenback also [hit a 24-year high against the Japanese yen](https://www.financedigest.com/asia-shares-weigh-china-risks-yen-hits-6-month-high.html "Asia shares weigh China risks, yen hits 6-month high") earlier on Thursday, boosted by the ever widening gap between the yields on U.S. and Japanese government debt. It’s not just [sterling weakness – it’s a dollar](https://www.financedigest.com/sterling-steadies-vs-dollar-ahead-of-boe-ecb-meetings.html "Sterling steadies vs dollar ahead of BoE, ECB meetings") strength story,” said Michael Hewson, chief markets analyst at CMC Markets. Sterling has its problems, but they are not unique to it – high inflation, surging energy [prices and falling](https://www.financedigest.com/uk-house-prices-stabilise-after-four-month-fall-halifax-says.html "UK house prices stabilise after four-month fall, Halifax says") disposable incomes. Still, analysts are forecasting more pain for the pound, and some predict it will test its [all-time low](https://www.financedigest.com/sterling-plunges-to-all-time-low-in-scathing-appraisal-of-fiscal-plan.html "Sterling plunges to all-time low in scathing appraisal of fiscal plan") in the months ahead. (Reporting by Tom Wilson and Sam Indyk; Additional reporting by Tommy Reggiori Wilkes; Editing by Kim Coghill, Kirsten Donovan and Alexander Smith) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---