The British pound is almost at parity with the US dollar, crashes to a record low of $1.04 for the first time since 1985

European startups continue to face headwinds on multiple fronts as the energy crisis coupled with foreign exchange rates make them less competitive than their American counterparts. As of July, British tech startups were not impacted by the fluctuation in the value of Euros as the currency used in the 27-nation block dropped to a 20-year-low against the US dollar. But it now appears no country in Europe is immune from the ongoing currency disaster.

On Monday, the British pound plunged to a record low against the dollar, breaking the previous record it set against the US dollar 37 years ago on February 25, 1985, when one pound was worth about $1.05.

During trading in Asia and Australia on Monday, the British Pound plunged nearly 5% to just above $1.03 and extended a 3.6% dive from Friday, causing analysts to make predictions the pound could plunge to parity with the US dollar. But the pound quickly and slightly recovered back to $1.07 after the European traders came online.

The drop came after the British Chancellor announced on Friday that the United Kingdom “would implement the biggest tax cuts in 50 years at the same time as boosting government borrowing and spending in the face of high inflation.”

In a statement, Craig Erlam, senior market analyst at Oanda, questioned the economic competency of the new British government saying: “Serious questions are already being asked about the economic competency of the new government. So much so that markets are factoring in a strong chance of a substantial emergency rate hike from the Bank of England in order to shore up the currency and confidence in the markets.”