Pound slides to fresh 14-month low; GSK buys US cancer firm for $1.15bn – business live

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Introduction: Pound slides to fresh 14-month low; GSK buys US cancer firm for $1.15bn

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The pound is on the slide again, as Rachel Reeves, the UK chancellor, returns to her desk after her trip to China.

The dollar has jumped to the highest level in more than two years against a basket of major currencies, to peak at 108.98, extending last week’s rally, after a strong US jobs market report underscored the strength of the world’s largest economy.

Sterling fell more than 0.5% to $1.2128 against the dollar, the lowest in 14 months while the euro is at its weakest since November 2022 at $1.0275.

The pound had a rough ride last week, as UK government bonds, known as gilts, sold off, pushing their yields higher, reflecting investors’ concerns about the UK’s public finances.

Bond yields rose sharply for governments worldwide, before falling back on Friday, after the last jobs report of the Biden administration showed the US labour market grew strongly in December. This morning, US and German yields are edging higher again.

UK officials will be monitoring closely moves in the price of government bonds after last week’s turmoil in global markets, when the yield – effectively the interest rate – on the 30-year bond hit its highest level since 1998.

Expectations for Federal Reserve rate cuts have receded sharply, but also for UK rate cuts. Markets are awaiting US data on inflation on Wednesday.

If the bond selloff is sustained, it could force the chancellor to make adjustments to her tax and spending plans or risk breaking her fiscal rules. Reeves has vowed to stand by her “non-negotiable” fiscal rules.

We reported last week that the Treasury was considering steeper cuts to public services while the Telegraph reported that disability benefits faced billion-pound cuts.

GSK, the UK’s second-biggest pharmaceutical firm, has struck a deal to buy Boston-based firm IDRx, which is developing a treatment for a rare type of gastrointestinal tumours.

GSK is paying up to $1.15bn under the terms of the deal, which will strengthen its oncology portfolio. Chief executive Emma Walmsley has been making targeted acquisitions to boost key areas, after slimming down the overall drugs portfolio in recent years.

GSK’s chief commercial officer, Luke Miels, said

IDRX-42 complements our growing portfolio in gastrointestinal cancers. This acquisition is consistent with our approach of acquiring assets that address validated targets and where there is clear unmet medical need, despite existing approved products.

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