Are we heading for a sterling crisis?

The pound sliding against the dollar and the euro is symbolic of the UK's economic weakness and a sign that overseas investors losing confidence in the country.

Communication Workers Union members striking
High inflation heralds an autumn of widespread industrial action
(Image credit: © Jose Sarmento Matos /Bloomberg via Getty Images)

“Financial markets express their faith – or lack of it – in a country” through its borrowing costs and the value of its currency, says Russ Mould of AJ Bell. In the UK, investors “do not like what they see”. On Monday the pound slumped close to its lowest level against the dollar in 37 years, trading as low as $1.14.

Rapid interest-rate hikes in the US have seen the greenback strengthen against most currencies this year – it recently hit a 24-year high against the Japanese yen. But sterling has done especially poorly of late. In August the pound lost 4.5% against the dollar, its worst monthly performance since October 2016, and also fell almost 3% against the euro.

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Markets editor

Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019. 

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere. 

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful. 

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.