US dollar hit 20-year high, pound under pressure

Volataile financial markets pushed the dollar to a two-decade high on Wednesday, as rising interest rates around the world heightened fears of a recession, while sterling fell further after recent warnings about British tax cut plans.

According to “Reuters”, the US dollar index rose by about half a percent to a new record at 114.78, and its upward trend supported the continuous rise in the US Treasury bond yields for ten years, which reached the level of four percent for the first time since 2010, and recorded 4.013 percent .

The dollar gained broadly, with the euro dropping 0.43 percent to $0.956. The pound, which is under a lot of pressure, fell 0.7 percent to $1.0678. The Australian dollar, which is particularly sensitive to fluctuations in investor sentiment, also fell by one percent

The Federal Reserve (the US central bank) is leading the global fight against rising inflation, and has become even more hawkish recently and pointed to more interest rate increases to add to the big moves of the past few months.

The continued rise in borrowing costs increased fears of a global recession, which boosted the rise in bond yields around the world.

However, the rise of the dollar against sterling was also affected by British domestic factors, after the British government announced last week a plan to cut taxes and increase borrowing.

This sent sterling down to $1.0327 on Monday, a record low, after settling near the $1.1300 level before the UK budget was announced last week.