The British pound has hit its lowest level against the US dollar in almost four decades.

Just after 2pm on Wednesday, sterling fell to $1.1407, according to Refinitiv data – its lowest point since 1985.

The pound has lost more than 15% against the dollar so far this year, hurt by both the dollar’s strength and the gloomy economic outlook for the UK.

UK inflation was already surging and a recession has been forecast by analysts for months.

But now Liz Truss has replaced Boris Johnson as prime minister.

Ms Truss has made it clear she wants to cut taxes while at the same time helping people to cope with rapidly-rising energy bills.

She has also ruled out extending a windfall tax on oil and gas companies, leaving little option apart from increasing government borrowing.

Sterling’s all-time low against the dollar was $1.0545 in March 1985, just before the Plaza Accord, when action was taken by some of the world’s biggest economies to rein in the Reagan-era superdollar.

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