First the Euro fell and now the British Pound is at an all time low against the Dollar

The British pound fell to a record low against the dollar on Monday, September 26, fueling speculation that the Bank of England may raise interest rates again to support the currency.

The British pound retreated nearly 5 percent Monday to fall below its 1985 low. It hit $1.0327 before recovering to $1.0605. On Friday 23, the pound had fallen more than 3.5% against the dollar after the new government announced the biggest tax cuts in 50 years.

The chart above shows the equivalence of the British pound to the U.S. dollar from the early 1970s to today. As can be seen, at the beginning of this decade, the pound was equivalent to over $2.5, hit a low of $1.08 in 1985, and hit a new all-time low on Monday.

From June to mid-September, the pound fluctuated between 1.14 and 1.23 USD, but in recent days it has seen a significant decline against the US currency.

Economist Peter Schiff, commenting on the pound’s fall to USD 1.05, said on Sunday 25: “It looks like the latest round of deficit-financed tax cuts will backfire, as the weak pound raises the cost of living more than the value of the tax cuts“.

The Euro also continued to fall

The euro also hit a 20-year low on Monday. It was trading at USD 0.9551 at the opening of markets and later rebounded to USD 0.9674. On Monday, August 8, the euro had fallen below the U.S. dollar. According to German bank Commerzbank, the euro’s weakness against the dollar could last until early 2023.

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Regarding the sharp drop in the pound, Sven Henrich, the founder of Normanth Trader, posted a tongue-in-cheek comment on Twitter on Monday:”You know, we’ve reached a unique moment in history where suddenly bitcoin is less volatile than fiat currencies“.

In the face of these fluctuations in fiat currency, some see bitcoin as a long-term store of value. Control of the issuance of fiat currency is in the hands of central banks, so there can be a significant expansion of the money supply within the policies of the authorities.

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Bitcoin, on the other hand, not only has a limited supply of 21 million coins, but its rate of issuance is cut in half every four years or so. This reduces bitcoin inflation in a programmed manner.

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