It looks like the global economy is about to go on a downward spiral and the Pound has already taken the hit as it plunges by the most since 2020 versus US Dollar. All is not well with the UK economy because the pound has hit an all-time low in the last thirty-seven years against the dollar. A fiscal stimulus package revealed by the US government further magnifies the threat of inflation and the nation’s ballooning debt. It seems like keeping the head above the water during these rather troubling times will be quite a task for the nation’s economy, and it seems like Twitterati agrees. Ever since Pound took the plunge, responses and reactions have been piling up on the microblogging site. Read along to know more.
On Friday, the Sterling fell as much as 3.7 percent, and this kickstarted discussions among the investors who are considering the parity with the euro and the dollar in addition to drawing comparisons with emerging markets. Investors are quite skeptical about the radical tax cuts for the UK since 1972, and several of them are questioning how the Chancellor of the Exchequer Kwasi Kwarteng will fund the same. They are of the opinion that this move will have a detrimental effect on the already tumbling economy as it will bolster the inflation levels, forcing the Bank of England into more aggressive tightening.
“It is hard to imagine a worse setup for the pound. As ever in such EM-esque situations, the worry is that once this cat is out of the bag even a return to orthodoxy might not quell the investor rush for the exit,” says James Athey, investment director at abrdn.
This also means that the investors do not expect a revival of the pound in the near future at least for now. According to Bloomberg’s options pricing model, there is only a one-in-four chance that the pound will step up and reach parity with the dollar in the course of the next six months. Traders are also pointing out the biggest downside risks for the sterling over the medium term.
Some are even condemning the government plans for the burden placed on the economy stating that the “government plans will challenge finances and this will continue to weigh on UK gilts and pound.” It seems like the pound’s plunge has piqued the interest of the Twitter town. Let us flip through a couple of reactions and responses on Twitter.
Do you think they are wrecking the UK and causing a #stockmarketcrash deliberately? Someone somewhere makes huge billions – disaster capitalism -the practice of taking financial advantage of natural or man-made disasters and unstable social, political, or economic situations
This budget is a massive and clear 'fuck you' to the UK from the Tories. Grifting chancers all, they know they'll profit but be miles away with bulging Bank accounts before they're called to account.#GTTO#Budget2023#stockmarketcrash#bankersbonuses