The Falling Pound: Threat or Opportunity?
The pound is again under the spotlight as it continues to struggle among its peer currencies.
On Monday 28 September sterling fell to its latest low against the euro, with one pound worth only €1.0838 at the close. Suddenly, analysts are starting to talk about a return to parity with the euro, last seen over the 2008 Christmas period. Contrast these figures with September 2007 when one pound was worth, on average over the month, €1.4513.
The pound is also struggling against the dollar: on the same Monday it dropped to $1.5772 – its weakest against the US currency since May. Take a look back to September 2007 again, and you’ll see sterling at a healthy $2.0184 dollars, on average over the month.
The economic picture in the UK is mixed at the moment. The economy has been sluggish – compared to its peers – in pulling out of recession, and that has caused many overseas investors and businessmen to view the UK negatively.
On the up-side, though, a weakened currency can also mean a revival in a country’s export industry. Indeed, a devaluation could be just what the UK needs to re-balance and recover.
Are you optimistic or pessimistic about the future prospects of sterling?
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The above comments do not constitute investment advice and IG Index accepts no responsibility for any use that may be made of them.
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