What a falling British pound means for the future and the U.S.
The British pound hit a record low against the U.S. dollar. What does a dropping pound mean for the British economy? And could it have an effect on America?
The British pound plunged to a record low against the U.S. dollar Monday.
It happened after the British government announced it would cut taxes and invest in industry in order to boost growth.
The pound, historically one of the strongest currencies in the world, fell to as low as $1.04 before bouncing back to approximately $1.07. For most of the past few decades, the pound averaged a price of about $1.50 against the dollar.
While a falling pound will be good for British exporters, traders are betting that the budget, unveiled by the new prime minster, Liz Truss, will lead to higher inflation — and have sent the value of the the country's currency plummeting in response.
Britons were already feeling the impact of the pound's decline before its most recent move. British drivers are now paying $5.45 more on average — equivalent to 5 pounds more — to fill up their cars since the beginning of the year as the pound has steadily fallen, The Associated Press reported Monday.
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