The pound has had a slightly less volatile week. While dipping back below $1.20 on Tuesday, sterling has recovered to just under $1.23 at the time of writing. Despite the rally, the UK currency is still around 5pc down on its dollar value before early October’s Conservative Party conference – where Prime Minister Theresa May hinted she would opt for a “hard Brexit” settlement, one ruling out “membership of the single market” and prioritizing stricter immigration controls.
This fall in the pound has been sparked, as opposed to caused, by these early political skirmishes linked to the UK’s exit from the European Union. There are solid, fundamental reasons, in other words, beyond Brexit, why the pound needed to come down For starters, the UK has the largest current account deficit in the G7 – among the biggest in our peacetime history. Our annual budget deficit, despite years of “austerity”, also remains extremely large.
Read More