Critics say these economic measures will disproportionately benefit the wealthy and could see the UK take high levels of debt at a time of rising interest rates.
“[It] it doesn’t look like the UK government is throwing a bone at the market here in terms of having a much more tempered fiscal trajectory, and so I think at this point right now the path of least resistance is going to stay lower,” Mazen Issa, senior forex strategist at TD Securities, told CNBC before the pound hit a new low.
“Below $1.05, you’re really looking at parity,” he told CNBC’s “Squawk Box Asia.”
“We’ve seen the euro dip below parity – I don’t see why the pound couldn’t either,” he added.
It’s a “major challenge” for the Bank of England to fight inflation as the government tries to stimulate the economy, said Nicholas Ferres, chief investment officer at Vantage Point Asset Management.
“The Bank of England might even hold an emergency policy meeting this week and raise rates, it wouldn’t surprise me if that happened,” he said.
Asia-Pacific currencies are also weakening
In the Asia-Pacific region, the currencies of Japan, South Korea and China weakened against the greenback, while the Australian dollar was roughly stable.
the Japaneses yen traded at 144 levels against the dollar, weaker compared to the authorities’ intervention in the foreign exchange market last week.
The South Korean won was close to 2009 levels at 1,428.52 to the dollar.
The US dollar index has risen sharply this year as the Fed aggressively raises interest rates. In particular, interest rate differentials between the US and Japan have widened significantly as the Bank of Japan sticks to its ultra-low rates.