The pound has plummeted against the Euro in a sign financial markets are not reacting too kindly to the Autumn Budget announcements from Rachel Reeves.
Pound Sterling has plunged 0.4 percent percent against the euro so far today having started at €1.2025, according to the BBC, citing Morningstar.
But it nosedived sharply at around 8am as the financial markets open, falling to as low as €1.1968 at around 12.45pm – minutes after the Chancellor began her Budget speech.
Despite recovering substantially over the following 90 minutes to just above €1.20, it quickly plunged again to €1.1975 at around 3.30pm.
READ MORE: Rachel Reeves’ ‘insulting and disdainful’ snub to pensioners at budget slammed’
In slightly better news, the pound has been more stable against the US dollar, bouncing back to around $1.3030.
Reeves announced a £40 billion tax increase in her budget to address gaps in public spending.
This includes raising employer National Insurance contributions from 13.8% to 15% and higher taxes on inheritance and luxury items.
The funds are supposed to be used for areas like the NHS, housing and green energy projects.
However, some experts believe these tax hikes may push the Bank of England to adjust its interest rates.
The Office for Business Responsibility (OBR) also raised its inflation forecast to 2.5% meaning prices may stay higher for longer, which could influence the Bank’s upcoming decision on rate cuts expected on November 7.
On the investment front, financial adviser Brian Byrnes from Moneybox stressed the need for savers to take advantage of tax-free savings accounts like ISAs, explaining that “higher taxes make it crucial to save smartly.”
And, as markets digest the Autumn Budget, traders are also keeping an eye on the Bank of England’s moves and upcoming economic data from the US, which could impact the pound’s value against both the euro and the dollar.
With everything that’s gone on today, Conservative MP John Redwood criticised Labour’s approach, saying: “The Labour government is choosing to tax rather than encourage growth, which could have long-term impacts on our currency and economy.”
