British Pound Drops To Record Low Against Singapore Dollar After Tax Cut Plans
With the British Pound (GBP) dropping to a new historic low against the Singapore Dollar (SGD), it might be time to book that long-awaited trip to London.
Last Thursday (22 Sep), it fell to a low of £1 to S$1.59.
British Pound Hits All-Time Low Against SGD, Time To Go For Shopping Spree On ASOS
Now, the currency has dropped yet again to another historic low of £1 to S$1.53.
The fall in the exchange rate comes in the wake of tax cuts in the country, which may force the Bank of England to take emergency action.
British Pound drops to historic low against Singapore Dollar
According to an online currency converter, the exchange rate between GBP and SGD fell to a new low on Monday (26 Sep).
Source: XE
Every £1 is now equivalent to S$1.53 in an exchange rate that has experienced a drop larger than the 47% fall reported on 22 Sep.
Earlier this year, The Business Times reported that the GBP could fall to as low as S$1.65 for every pound.
At S$1.53, the currency has now dropped far lower than its projected expectations.
Record lows due to tax cuts
According to BBC, such a phenomenon can be attributed to the United Kingdom (UK) imposing its biggest tax cuts in 50 years.
Source: Lucas Davies on Unsplash
Britain’s Chancellor of the Exchequer Kwasi Kwarteng also promised more tax cuts in addition to a £45 billion package, alongside expectations of an increase in borrowing.
This, in conjunction with the strength of the US dollar, has caused the pound to fall in value.
A separate report by BBC also cited several other factors contributing to the historic drop of the GBP — for instance, weak retail sales, high prices, and soaring energy costs.
In addition, the fluctuations reflect the confidence that people are feeling with regard to the country’s economic prospects.
The fall in the GBP, however, may not last long.
Investors speaking to BBC said the Bank of England might implement emergency measures to stop the lowering of the currency.
“An emergency meeting rate hike could happen as soon as this week to regain credibility in the market,” Stephen Innes, managing partner at SPI Asset Management, told BBC.
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Featured image adapted from Julia on Flickr and Yun Huang Yong on Flickr.
