Pound falls to lowest level since November as UK borrowing costs rise

The British pound has dropped nearly 1% to just under 1.23 US dollars, marking its lowest point since November 2023. This decline follows a rise in UK government borrowing costs, with yields on 10-year bonds reaching their highest since 2008. Government bond yields have surged, reflecting increased borrowing costs. The yield on 30-year bonds also hit a peak not seen since 1998. Concerns over fiscal sustainability and potential stagflation are driving investor anxiety. Chancellor Rachel Reeves faces pressure to adjust fiscal plans, possibly leading to spending cuts or tax hikes. After the autumn Budget, she has limited financial headroom, complicating efforts to manage rising debt interest costs.