The collapse of the value of the pound in the wake of Friday’s mini-budget appears to have stalled, for now, but only thanks to market expectations that the Bank of England will still be forced to intervene.
The rout for sterling, which began after Chancellor Kwasi Kwarteng revealed a £45bn tax cut plan on top of government aid for energy bills, was a consequence of concern over the levels of borrowing required.
It essentially called in to question the confidence the market had for sustainable public finances in the UK, also pushing up the rates demanded by investors to hold UK bonds – government IOUs – which will be used to fund the growth plan.
The pound hit an all-time low versus the dollar of $1.03 early on Monday but it later recovered some lost ground and had settled around $1.08 on Tuesday.
There were three main factors behind the limited fightback.
One was a statement from the Treasury on Monday aimed at soothing nerves around Friday’s giveaways.
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It revealed that Mr Kwarteng was to set out a “medium-term fiscal plan” on 23 November which would also contain independent analysis from the Office for Budget Responsibility – a check that was lacking in the mini-budget.
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Why Bank of England shunned emergency rate hike
The second was due to a statement from the Bank of England which affirmed it would “not hesitate” to raise interest rates to prop up the value of sterling but added that it would make a full assessment at its next scheduled meeting.
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The final facet can be traced across the Atlantic where the dollar – the world’s reserve currency which has strengthened significantly this year amid the economic turmoil linked to Russia’s war in Ukraine – fell back against a basket of international currencies.
Analysts cited renewed investor interest in stocks but remained cautious about the outlook as markets, already jittery at the prospect of US interest rates staying higher for longer, have been further unnerved by the upheaval for the pound and UK bond yields.
There was some relief for the government when the Treasury successfully raised £1.2bn through a bond sale on Tuesday morning.
The amount was covered 2.3 times, which Sky’s economics and data editor Ed Conway said showed there was “no shortage of appetite” for the debt.
Such moves are expected to be only temporary amid the turmoil of the past few days.
Many market participants talked about a long road back to recovery for sterling because credibility had been lost.
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Why has the pound fallen to a record low?
Allan Monks, an economist at America’s largest bank JP Morgan, said the statements from the Bank and Treasury had been “measured”.
“But there is still no clear sign that the source of the problem – the government’s fiscal strategy – is being reversed or reconsidered,” he complained.
“This will need to happen before November in order to avoid a much worse outcome for the economy.”
Larry Summers, a former US Treasury Secretary, also spoke about credibility being lost and suggested that the crisis would affect London’s viability as a global financial centre.
Seema Shah, chief strategist at Principal Global Investors which manages around $500bn in assets, told the Reuters news agency: “Once a market starts to move with this kind of momentum, it’s hard to put a number on where it (sterling) will trough.
“But as an investor you take a long-term view. If you look at the UK as somewhere to invest over five years, for me that’s a no.”
Others said another factor behind sterling’s performance since Monday afternoon was that money leaving UK bonds was finding its way to the currency instead – but only because of the higher rate hike expectations.
Victoria Scholar, head of investment at Interactive Investor, said markets were pricing in an emergency rate hike with 175 basis points’ (1.75%) worth of increases by November.
“The slump in sterling could exacerbate the UK’s inflation problem, with price levels currently flirting with double digits.
“More expensive imports may add to the UK’s upward price pressures, which is likely to prompt more aggressive action from central bank policy makers.”
Public safety is “at risk” because more inmates are being sent to prisons with minimal security, a serving governor has warned – as details emerge of another manhunt for a foreign national offender.
Mark Drury – speaking in his role as representative for open prison governors at the Prison Governors’ Association – told Sky News open prisons that have had no absconders for “many years” are now “suddenly” experiencing a rise in cases.
It comes after a man who was serving a 21-year sentence for kidnap and grievous bodily harm absconded from an open prison in Sussex last month.
Sky News has learned that Ola Abimbola is a foreign national offender who still hasn’t returned to HMP Ford – and Sussex Police says it is working with partners to find him.
WARNING: Some readers may find the content in this article distressing
Image: Ola Abimbola absconded from an open prison. Pic: Sussex Police
For Natalie Queiroz, who was stabbed 24 times by her ex-partner while she was eight months’ pregnant with their child, the warnings could not feel starker.
Natalie sustained injuries to all her major organs and her arms, while the knife only missed her unborn baby by 2mm.
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“Nobody expected either of us to survive,” she told Sky News.
“Any day now, my ex who created this untold horror is about to go to an open prison,” Natalie said.
Open prisons – otherwise known as Category D jails – have minimal security and are traditionally used to house prisoners right at the end of their sentence, to prepare them for integrating back into society.
With overcrowding in higher security jails, policy changes mean more prisoners are eligible for a transfer to open conditions earlier on in their sentence.
Image: Natalie Queiroz was stabbed 24 times by her ex-partner
“It doesn’t feel right, it’s terrifying, and it also doesn’t feel like justice,” Natalie said, wiping away tears at points.
Previously, rules stated a transfer to open prison could only take place within three years of their eligibility for parole – but no earlier than five years before their automatic release date.
The five-year component was dropped in March last year under the previous government, but the parole eligibility element was extended to five years in April 2025.
Raja, who is due for release in 2034, has parole eligibility 12 years into his sentence, which is 2028.
Under the rule change, this eligibility for open prison is set for this year – but under the new rules it could have been 2023, which is within five years of his parole date.
Another change, introduced in the spring, means certain offenders can be assumed suitable for open prisons three years early – extended from two years.
Image: Natalie says her ex-partner Babur Raja caused ‘untold horror’
Natalie has been campaigning to prevent violent offenders and domestic abuse perpetrators from being eligible to transfer to an open prison early.
She’s had meetings with ministers and raised both her case and others.
“They actually said – he is dangerous,” she told Sky News.
“I said to [the minister]: ‘How can you make a risk assessment for someone like that?’
“And they went: ‘If we’re honest, we can’t’.”
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The government told Sky News that Raja’s crimes were “horrific” and that their “thoughts remain with the victim”.
They also insist that the “small number of offenders eligible for moves to open prison face a strict, thorough risk assessment” – while anyone breaking the rules “can be immediately returned”.
Image: Mark Drury, a representative of the Prison Governors’ Association
But Mr Drury describes risk assessments as an “algorithm tick box” because of “the pressure on offender management units”.
These warnings come at an already embarrassing time for the Prison Service after migrant sex offender Hadush Kebatu was mistakenly freed last month.
In response to this report, the Ministry of Justice says it “inherited a justice system in crisis, with prisons days away from collapse” – forcing “firm action to get the situation back under control”.
The government has promised to add 14,000 new prison places by 2031 and introduce sentencing reforms.
The US Congress has written to Andrew Mountbatten Windsor requesting an interview with him in connection with his “long-standing friendship” with paedophile financier Jeffrey Epstein.
The Committee on Oversight and Government Reform said it is investigating the late financier’s “sex trafficking operations”.
It told Andrew: “The committee is seeking to uncover the identities of Mr Epstein’s co-conspirators and enablers, and to understand the full extent of his criminal operations.
“Well-documented allegations against you, along with your long-standing friendship with Mr Epstein, indicate that you may possess knowledge of his activities relevant to our investigation.
“In the interest of justice for the victims of Jeffrey Epstein, we request that you co-operate with the committee’s investigation by sitting for a transcribed interview with the committee.”
Image: The congressional committee wants to understand any ‘activities’ relevant to its Epstein investigation. PA file pic
Virginia Giuffre, who died in April, accused Andrew of sexually assaulting her after being introduced by Epstein. Andrew has always vehemently denied her accusations.
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The letter to the former prince, is addressed to Royal Lodge, Windsor Great Park, the home he agreed last week to leave, when he was stripped of his royal titles.
It outlines his “close relationship” with Epstein and references a recently revealed 2011 email exchange in which Andrew told him “we are in this together”.
And it says the committee has identified “financial records containing notations such as ‘massage for Andrew’ that raise serious questions”.
The committee said Andrew’s links to Epstein “further confirms our suspicion that you may have valuable information about the crimes committed by Mr Epstein and his co-conspirators”.
The letter, signed by 16 members of Congress, requested Andrew responds by 20 November.
The move followed the publication Ms Giuffre’s posthumous memoirs, and the US government’s release of documents from the paedophile’s estate.
Ms Giuffre alleged she was forced to have sex with Andrew three times – once at convicted sex trafficker Ghislaine Maxwell’s home in London, once in Epstein’s address in Manhattan, and once on the disgraced financier’s private island, Little St James.
The incident at Maxwell’s home allegedly occurred when Ms Giuffre was 17 years old.
Epstein took his own life in a New York prison in 2019 while awaiting trial on sex trafficking and conspiracy charges.
Andrew Mountbatten Windsor has been summoned by Congress to answer questions about his friendship with Jeffrey Epstein.
The Committee on Oversight and Government Reform said it is investigating the late financier’s “sex trafficking operations”.
Andrew’s friendship with the paedophile has come under intense scrutiny in recent years and has led to him being stripped of his titles and made to leave his accommodation at Royal Lodge on the Windsor estate.
The memoir of Virginia Giuffre, one of Epstein’s victims, was posthumously published last month and in it she alleged she had sex with Andrew three times while she was a teenager.
Andrew paid a settlement to Ms Giuffre in 2022 and has always denied wrongdoing. He has previously resisted calls to be summoned to the US.
Here is the letter in full:
We write to seek your cooperation in the Committee on Oversight and Government Reform’s (Committee) investigation into Jeffrey Epstein’s sex trafficking operations. The Committee is seeking to uncover the identities of Mr. Epstein’s co-conspirators and enablers and to understand the full extent of his criminal operations.
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Well-documented allegations against you, along with your long-standing friendship with Mr. Epstein, indicate that you may possess knowledge of his activities relevant to our investigation. In the interest of justice for the victims of Jeffrey Epstein, we request that you cooperate with the Committee’s investigation by sitting for a transcribed interview with the Committee.
It has been publicly reported that your friendship with Mr. Epstein began in 1999 and that you remained close through and after his 2008 conviction for procuring minors for prostitution.
It has also been reported that you traveled with Mr. Epstein to his New York residence, the Queen’s residence at Balmoral, and to Mr. Epstein’s private island in the U.S. Virgin Islands, where you have been accused of abusing minors.
This close relationship with Mr. Epstein, coupled with the recently revealed 2011 email exchange in which you wrote to him “we are in this together,” further confirms our suspicion that you may have valuable information about the crimes committed by Mr. Epstein and his co-conspirators.
As you are well aware, Virginia Roberts Giuffre made several allegations that you abused her when she was just 17 years old.
In her 2021 lawsuit, Ms. Giuffre alleged that she was forcibly “lent out” to you for sexual purposes on three separate occasions. In addition to these allegations, flight logs document several instances in which you were a passenger on Mr. Epstein’s plane between 1999 and 2006, while his criminal activities were ongoing.
In response to a subpoena issued to the Epstein estate, the Committee has identified financial records containing notations such as “massage for Andrew” that raise serious questions regarding the nature of your relationship with Mr. Epstein and related financial transactions.
In her posthumous memoir, Ms. Giuffre expressed a fear of retaliation if she made allegations against you, and writes that the settlement agreement you executed with her restricted her to one-year gag order designed to protect the Crown’s reputation.
Recent reporting confirms those fears, as law enforcement authorities in the United Kingdom have launched an investigation into allegations that you asked your personal protection officer to “dig up dirt” for a smear campaign against Ms. Giuffre in 2011.
This fear of retaliation has been a persistent obstacle to many of those who were victimized in their fight for justice. In addition to Mr. Epstein’s crimes, we are investigating any such efforts to silence, intimidate, or threaten victims, and are interested in any avenues that may further shed light on these activities.
Given these recent events and the appalling allegations that have come to light from Ms. Giuffre’s memoir and other reliable sources, the Committee requests that you make yourself available for a transcribed interview with the Committee and provide insight into the crimes of Jeffrey Epstein’s co-conspirators.
Due to the urgency and gravity of this matter, we ask that you provide a response to the Committee’s interest by November 20, 2025.
The Committee on Oversight and Government Reform is the principal oversight committee of the House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X. If you have any questions about this request, please contact Committee Democratic staff at (202) 225-5051. Thank you for your prompt attention to this request.
The letter is signed by 16 members of the Committee on Oversight and Government Reform.