The British pound fell to $1.2304, its lowest since November 2023, as concerns over the UK’s fiscal and inflation outlook pressured investor sentiment. This drop came despite UK bond yields surging, with the 30-year yield at its highest since 1998 and the 10-year yield at levels unseen since 2008. Typically, higher yields boost a currency, but the decline points to capital flight driven by fears of persistent inflation and fiscal instability. Rising borrowing costs also strain Chancellor Rachel Reeves, whose fiscal flexibility is shrinking. In October, Reeves unveiled a budget including £142 billion in borrowing and a £74 billion annual spending increase, raising fiscal sustainability concerns. Inflation fears also persist, with CPI, wage growth, and inflation expectations rising. Traders now expect only two Bank of England rate cuts this year, down from over three predicted a month ago.