As Brexit day nears, sterling is once again in for a rocky ride
Of 140-odd currencies tracked by Bloomberg, a data provider, the pound has depreciated against 130 since the referendum
IN THE weeks following the Brexit referendum in June 2016 the pound gyrated wildly, losing 10% of its value. After a period of calm, sterling is looking shaky again. On a trade-weighted basis it has lost 5% of its value since April. On August 10th it fell below $1.28 for the first time in a year. Further depreciation looks likely, given uncertainty over the government’s Brexit plans.
The prospect of leaving the European Union has depressed sterling’s value because it will damage the economy. Slower growth will call for looser monetary policy. As returns on sterling-denominated assets fall, fewer traders will want to hold them. Of 140-odd currencies tracked by Bloomberg, a data provider, sterling has depreciated against more than 120 since the referendum (see chart). The Venezuelan bolívar and the Turkish lira are among a mere handful of currencies not to have gained in value against the pound.
This article appeared in the Britain section of the print edition under the headline "Crunch time"
From the August 18th 2018 edition
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