The pound has dropped to a 14-month low in early trading in London, as the bond market sell-off fuels anxiety over UK assets. Sterling has lost a cent against the US dollar, extending its recent losses, falling to about $1.226. That is its lowest level since November 2023, suggesting that the jump in UK borrowing costs this week is continuing to worry the markets, at a time when the dollar is generally strengthening. Michael Brown, a senior research strategist at the brokerage Pepperstone, said “things are also getting rather ugly” in the UK. UK borrowing costs are rising again this morning, despite the government’s efforts to calm the markets last night. The yield, or interest rate, on benchmark 10-year UK debt rose by 12 basis points (or 0.12 percentage points) in early trading in London to 4.921%, the highest since 2008. Thirty-year bond yields, which hit 28-year highs this week, are rising again, too – up more than 10 basis points to 5.474%. After two days of sharp rises in UK borrowing, City experts are harking back to previous episodes of financial panic – including the dark days after Liz Truss's mini-budget of 2022. Britain finds itself in the eye of a global bond market storm at the moment – yesterday, the yield (rate of return) on 10-year UK government debt hit its highest since the 2008 financial crisis, a day after the 30-year bond yield hit its highest level since 1998. Last night, Rachel Reeves insisted she had an "iron grip" on the nation’s finances, with a Treasury spokesperson declaring: “No one should be under any doubt that meeting the fiscal rules is non-negotiable and the government will have an iron grip on the public finances. “UK debt is the second lowest in the G7 and only the OBR’s forecast can accurately predict how much headroom the government has - anything else is pure speculation. “Kickstarting economic growth is the number one mission of this government as we deliver on our plan for change. Over the coming weeks and months, the chancellor will leave no stone unturned in her determination to deliver economic growth and fight for working people.” The agenda • 10am GMT: eurozone retail sales for November • 12.30pm GMT: Challenger survey of US job cuts in December • 4pm GMT: Bank of England policymaker Sarah Breeden gives speech We'll be tracking all the main events throughout the day …
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