GBP/USD comes under renewed pressure, testing 1.0680s

• GBP/USD bulls attempting to recover from massive losses.
• US dollar has hit a new 20-year top of 114.58 amid heavy volatility. 

GBP/USD is down by over 1.5% on the day, but trading at 1.0698, it is well away from the lows of 1.0356 that were scored earlier in the session and rests between there and the day's high of 1.0931. We have seen a record low in the pair on the back of a renewed selloff in British gilts and concerns about high-interest rates that have continued to put pressure on the global financial system.

In particular, markets took fright at British finance minister Kwasi Kwarteng announcing the scrapping of the top rate of income tax and canceling a planned rise in corporate taxes. The reaction to the proposed plan is a real concern and adds uncertainty to the economy. Additionally, US dollar strength is weighing heavily on the FX space with the dollar index, which tracks the greenback against six peers - hitting a new 20-year top of 114.58 in early trade.

The drop in the pound is also leading to speculation the Bank of England will have to hold an emergency meeting to raise rates. The Bank of England said on Monday it would not hesitate to change interest rates and was monitoring markets "very closely".

 "The Bank is monitoring developments in financial markets very closely in light of the significant repricing of financial assets," Bank of England Governor Andrew Bailey said. "The MPC will not hesitate to change interest rates by as much as needed to return inflation to the 2% target sustainably in the medium term, in line with its remit." The Treasury and central bank statements came towards the end of a day of turmoil for Britain's currency and debt with the British 10-year government bond prices now on track for their biggest slump in any calendar month since at least 1957.