Sterling has hit 37-year low against dollar

The official line from government isn't making a statement on market movements. The baptism of fire for the chancellor continued in the early hours of Monday morning, with the pound hitting more 37 year lows in early Asian trade, and then plummeted to all-time lows against the dollar, below $1.04 in early market trade.

The government will be concerned with record lows, as well as a surge in UK Government borrowing costs, whatever is said in public. The market opening in Europe this morning will be watched nervously.

The Bank of England is expected to raise interest rates more aggressively because of Britain's increased charge for larger borrowings and the Bank of England's ability to charge more for larger borrowings.

These rates will be passed on to household and commercial borrowers who are borrowers of fixed-term loans. The tax cuts should help temper the recession, but very fast rate rises could make that worse.

The pound fell significantly against the dollar on Friday and again on Monday morning. One in four financial markets indicate that a pound could be worth less than a dollar. It is the lowest value for sterling against the dollar in the history of the US currency and the USA.

The last time the pound was near $1.05 was in February 1985. The official line from Downing Street said that the government was unworried by a slide in the pound, and that it was mainly the result of a strong dollar and speculation.

In private, official papers from that time, it was revealed that Mrs Thatcher was seeking answers from President Reagan, and imploring the Treasury to set a trap for those who speculating against the pound. The Bank of England raised interest rates to protect the value of sterling.

While the dollar has been strong as its central bank the Federal Reserve hiked interest rates aggressively, sterling has also been weak against other major currencies such as the euro. The Bank of England or the government may have to intervene in some way to boost confidence, according to some economists and traders.