Sterling crashed to a record low early on Monday as traders rushed for the exits on mounting concern that the new government's economic plan will stretch Britain's finances to the limit.
The British pound's searing drop helped lift the safe-haven U.S. dollar to a new two-decade peak against a basket of major currencies, while the euro hit a fresh two-decade low against the greenback.
But it was sterling's slide that rippled across markets, down as much as 4.9% to an all-time low of $1.0327 GBPUSD.
Thomson Reuters
Sterling was also down 1% against the euro, having hit its lowest since September 2020 at 92.60 pence EURGBP.
Kit Juckes, head of currency strategy Societe Generale in London, said markets had a tendency to overshoot but made two points about sterling's slide.
"One is the loss of confidence in UK fiscal policy and that won't help sterling," he said. "The second is that the mini budget has allowed sterling to be the short of choice against the dollar."
DOLLAR STRONG
The dollar firmed 0.52% to 144.09 yen USDJPY, heading back toward Thursday's 24-year peak of 145.90. It sank to around 140.31 that same day after Japan conducted yen-buying intervention for the first time in more than 20 years.
And the dollar index DXY - where the basket includes sterling, the euro and the yen - reached 114.58 for the first time since May 2002, reflecting the greenback's broad strength.
"The focus is on sterling but the story on the dollar is far wider and that is the part that is not helping," said Seema Shah, chief strategist at Principal Global Investors.
"There is a lot of pressure on Japan, China that have loose policies," she added.
China's offshore yuan USDCNH slid to a new low of 7.1728 per dollar, its weakest since May 2020. Onshore, the yuan also touched a 28-month trough of 7.1690.
The risk-sensitive Australian dollar AUDUSD dropped to $0.64845, its lowest since May 2020, and the Canadian dollar USDCAD touched 1.3638 to its U.S. counterpart, its weakest since July 2020.
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