Sterling, the UK's currency, has plummeted to a record low against the dollar on Monday as markets reacted to the nation's biggest tax cuts in 50 years. The pound dropped nearly five percent in early trading to $1.03.

CGTN looks at the impact of what a weak sterling means for the public.

Interest rates

The falling pound is likely to lead to the Bank of England raising interest rates sooner and more sharply, and markets are expecting a big increase at the next central bank meeting in November. This will have an instant impact on mortgage owners who are on a variable rate at a time when household bills are already tight. Inflation is currently at 9.9 percent, well above the preferred two percent rate. 

The central bank released a statement following the plunge saying it is monitoring the financial markets closely and will not hesitate to act where necessary in November.

Consumer prices

Sterling's drop means the pound is worth less and this will make the cost of buying goods from abroad go up. Home made products in the UK which use imported parts could also increase in prices. Economists are concerned that the current economic environment will make the UK less attractive for foreign investors.

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Energy prices

With the pound under pressure, consumers face even higher prices for key commodities like oil and gas which are priced in dollars. While oil prices are back to pre-Ukraine crisis levels, a weaker pound results in higher costs for motorists. The Automobile Association says the pound's plunge has already left drivers paying an extra $6.50 for a tank of petrol and this at a time when the cost of living crisis is already putting a strain on household budgets.

Government policy

For now, the UK government is bullish that its mini-budget will kick start the struggling economy. Finance Minister Kwasi Kwarteng says they are focused on long term economic growth and not stock market fluctuations but if sterling continues to slide and the economy doesn't show signs of improvement, the government may be forced to reassess its policy. Kwarteng will lay out his medium term fiscal plan on November 23 on how he plans to reduce debt.