Dow futures fell 200 points as the British pound hit a record low against the dollar

US stock futures fell on Monday as rising interest rates and foreign exchange turmoil threatened to push the S&P 500 to a new closing level for the year.

Dow Jones Industrial Average futures were down 210 points, or 0.7%. S&P 500 futures fell 0.7%. Nasdaq 100 futures lost 0.6%.

The British pound fell to a record low on Monday against the US dollar. Sterling fell at one point by 4% to an all-time low of $1.0382. The Fed’s aggressive hike campaign, along with the UK tax cuts announced last week, have caused the US dollar to rise. The euro has reached its lowest level against the dollar since 2002. An appreciation of the US currency can hurt the profits of US multinationals, as well as wreak havoc in global trade, much of which is handled in dollars.

“This dollar strength has historically led to some kind of financial/economic crisis,” Michael Wilson, chief US equity analyst, wrote in a note. “If ever there was a time to look for something to break, this would be it.”

Stocks on Friday ended a rough week as the Dow Jones Super Average found a new intraday low for the year and closed down 486 points. The broad-based S&P 500 index temporarily broke its lowest closing level in June and closed 1.7% lower. The heavy Nasdaq Composite lost 1.8%.

Traders will closely watch the S&P 500 on Monday for any break below the bear market low. The S&P’s closing low of the year in June was 3666.77. It closed on Friday at 3693.23 after trading briefly below that close. The intraday low for this year is 3636.87. Any trading below these levels can lead to more selling in the market.

Another massive rate hike by the Federal Reserve last week was the catalyst for the latest bearish move in the markets. The central bank indicated that it may raise interest rates to 4.6% before tapering back. The forecast also shows that the Fed’s plans will be aggressive this year, raising interest rates to 4.4% before the end of 2022.

Bond yields rose after the Federal Reserve decided to raise interest rates by 75 basis points. The two-year and 10-year Treasury rates are at levels not seen in over a decade. On Friday, Goldman Sachs lowered its year-end target for the S&P 500 index to 3600 from 4300.

Rates rose again on Monday with two-year Treasuries up 4.29%.