A strong dollar and a weak pound spells trouble for Kwasi Kwarteng

This combination will make life very difficult for the new chancellor on Friday – and, of course, more importantly, for all of us this winter, writes Hamish McRae

I don’t think this government quite realises how hostile the economic environment is towards it (Getty)

A sinking pound or a soaring dollar? The view of the world from Washington DC is always different from that from London, but never more so than this week. The president is in the UK for the state funeral of Queen Elizabeth II, as are most of the other global leaders, but from here the prime question this week is: what will the Federal Reserve do to interest rates?

Britain is important in cultural terms, and the monarchy is a key element of the country’s “soft power”, the expression coined by the US academic Joseph Nye to show how image and culture extended the US’s global reach above and beyond its military might. That matters. But from an economic or financial perspective, the UK is a bit of a backwater.

You can see that in the lack of any response here in the US to the fact that last week the pound plunged to its lowest against the dollar since “Black Wednesday” 30 years ago, when sterling was kicked out of the European Exchange Rate Mechanism.