Pound Set to Devalue More Swiftly, Confirms UK Chancellor Rishi Sunak

2 mins
28 October 2021, 09:28 GMT+0000
Updated by Kyle Baird
28 October 2021, 09:28 GMT+0000
In Brief
  • UK Chancellor Rishi Sunak delivered his third-quarter budget overview today.
  • The pound is expected to devalue more sharply next year against other assets.
  • No change to capital gains tax despite political pressure.
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In what may be good news for crypto holders, inflation in the UK is predicted to rise over the year. This will likely be a blow to the strength of the pound, however, as UK Chancellor Rishi Sunak announced the predicted inflationary increase during his third-quarter budget overview on Oct 27.

The Bank of England’s monetary policy states that the UK inflation should target 2%, but the current figure is 3.1%. 

In his address to the House of Commons (HoC), the Chancellor announced that interest rates were set to increase further to an average of 4% next year. It was a neat linguistic trick from the Conservative politician. To hit an average of 4% from a starting point of 3.1%, UK inflation may of course rise higher still.

“I have written to the bank of England today to reaffirm their remit to achieve low and stable inflation,” said Sunak to HoC. “I understand that people are concerned about global inflation, but they have a government here at home ready and willing to act.”

Inflation is the rate at which consumer prices increase relative to fiat currency, devaluing its purchasing power over time. While higher inflation is viewed negatively by fiat holders, the inverse opinion is generally held by crypto hodlers who expect the value of their crypto assets to increase in relation to fiat.

Capital gains taxes in the UK

In the lead-up to the budget discussion, the Chancellor was under pressure from opposition benches and some sections of the UK press to increase capital gains tax. Capital gains tax is applied to a number of areas, focusing on the appreciation of assets including property and cryptocurrency. 

Part of the clamor toward higher taxation for crypto users was fueled by the International Monetary Fund who advocated for higher capital gains in its April Covid Recovery report.

“Governments could consider higher taxes on property, capital gains and inheritance,” said the report co-signed by Paolo Mauro, the IMF’s deputy director of fiscal affairs.

In a blow to lobbyists and a further boon to cryptocurrency traders, Sunak failed to even mention the tax in the latest budget.


BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.