Pound and borrowing costs stabilize after market panic
The pound and UK government borrowing costs have stabilized after a few days of volatility.
The pound rose slightly early on Tuesday to $1.22 after falling to around $1.21 on Monday, its lowest level since November 2023, while government borrowing costs fell slightly.
Borrowing costs are rising in many countries around the world, but some argue that decisions taken in the Budget have left the UK more vulnerable.
Recent market movements are Chancellor Rachel Reeves put under pressureOn Monday, Prime Minister Sir Keir Starmer said she was doing a “wonderful job”, but the Conservatives said she was “holding on by her nails”.
Reeves faced questions in the Commons this afternoon for the first time since returning from a trip to China at the weekend.
He said that this visit will improve economic relations with BeijingBut conservatives said she had “ran away” at a time of uncertainty in the financial markets.
Governments typically borrow money by selling bonds to large investors such as pension funds. UK government bonds are known as gilts.
The yield on 10-year gilts – the interest rate at which the government returns decade-old debt to investors – fell marginally to 4.87% on Tuesday, before rising to nearly 4.9% on Monday, the highest level in 17 years. Is.
Meanwhile, the 30-year gilt yield fell to 5.42% from 5.44% on Monday, the highest in 27 years.
Government debt costs are also rising in Germany, France, Spain and Italy. Experts say investors are Predicting that US President-elect Donald Trump’s tariffs will increase inflation in the USWhich means interest rates will remain high there and elsewhere.
