Pound sinks as markets react to mini-budget

The pound has fallen to a fresh 37-year low against the dollar as markets react to the chancellor's mini-budget announcement.

UK stocks also slid after Kwasi Kwarteng outlined a series of tax cuts and economic measures in a massive shake-up of the country's finances.

The pound fell by more than 1% against the dollar, dropping below $1.11.

The currency has been falling in recent weeks, partly down to the strength of the US dollar.

Meanwhile, the UK's FTSE 100 of major shares fell to its lowest level for more than two months.

City analysts have been increasing their expectations of quicker and higher interest rates after the government announced a £45bn tax giveaway, leading some to conclude that inflation will remain high for some time.

According to Bloomberg data, analysts expect UK interest rates to hit 5.2% in August 2023, with expectations rising that there could be a one percentage point interest rate hike at the Bank of England's next meeting in November.

On Thursday, the Bank increased UK rates by half a percentage point to 2.25%.

The cost of servicing the UK's debt has also risen after the announcement of government borrowing to fund tax cuts.