Pound hits record low after tax cut plans - BBC

If the pound stays at this low level against the dollar, imports of commodities priced in dollars, including oil and gas, will be more costly.

There are also concerns that the government's plans to cut taxes and borrow billions will stoke high inflation and force the Bank of England to raise interest rates even further.

While worries about the UK economy have hit the pound, its value has also been under pressure due to the strength of the dollar.

Last week, the Bank raised interest rates by half a percentage point to 2.25% to try to calm inflation, which is at a 40-year high of 9.9%.

However, some economists have speculated that the Bank may call an emergency meeting as soon as this week to hike interest rates again.

The Bank of England declined to comment.

When you travel abroad, things will be more expensive if the pound buys less of the local currency.

However, a fall in the pound affects household finances too.

If the pound is worth less, the cost of importing goods from overseas goes up.

For example, as oil is priced in dollars a weak pound can make filling up your car with petrol more expensive.

Commenting on the likelihood the Bank of England could raise rates before its scheduled meeting in November, former Bank deputy governor Sir John Gieve told the BBC: "I'm sure they very much don't want to do that...

"To stop the bleeding even temporarily, the Bank of England may well enter 'whatever it takes' territory to bring inflation down.

Paul Davies, chief executive at Carlsberg Marston's Brewing Company, said the fall in the pound was "worrying" for the British beer industry, which imports hops from overseas.

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