Rampant dollar stomps on sterling as Fed marches on with rate rises

The dollar continued its dominance on currency markets as it surged to a 37- year high against the pound. 

Sterling dropped to just $1.1403 against the dollar in afternoon trading, its lowest since 1985, and the greenback also crushed the Japanese yen, hitting a 24-year peak of nearly 145 yen to the dollar. 

The moves come as the Federal Reserve continues its aggressive rate hike path in order to get American inflation back to its 2 per cent target. 

The falls also match the nadir of the mid-1980s, when a catalogue of tax cuts and interest rate hikes by the president, Ronald Reagan, and Paul Volcker, the Federal Reserve chairman, put a rocket under the dollar. 

Meanwhile, the euro at one point hit €0.98, its lowest level since 2002, as currency traders continued to fret about a growing energy crisis on the continent after Russia decided to shut off the crucial Nord Stream 1 gas pipeline. 

Traders did not appear to think the euro would make much of a recovery despite predictions the European Central Bank will deliver a huge 0.75 per cent interest rate hike today in a bid to curtail inflation.