The price of a pound sterling is based very heavily on what the next few months in the UK hold in regards to Brexit. Currently, the UK is in the middle of electing a new prime minister. As the head of the cabinet and leader of ministers in the executive branch, this person has a significant influence of the political state of the UK. Their actions are bound to affect the price of currency, and already have proven to have done so.
Within the last week, both conservative candidates who are running for the position of prime minister mentioned that they are both in support of the creation of a hard border in the case that there were to be a no-deal Brexit. Immediately after this debate, the pence dropped significantly in value.
The pound usually costs around 0.7-0.85 cents to purchase, but as of 16 July you can exchange 90.22 cents for one pound. This is the lowest value that a pence has been in the last 27 years, and is showing trends that indicate the value will continue to fall. Economists are predicting that right before Brexit the euro and the pound will be almost 1:1 in exchange rates.
This significant decline shows that the United Kingdom should be especially cognizant of the choices that they choose to make from now until October 31, and beyond if Brexit is further extended backwards.
Although this monetary value of the pound in relation to other currency has changed, this does not signify that the economy is weak. If there were to be a no deal Brexit, the UK has shown that it will continue to be a relatively strong economy. Ireland may have a harder time recovering, given the abundance of reliance that is placed on the UK from a trade perspective.
Overall, Brexit’s every decreasing final date has become a main topic in both Ireland and the United Kingdom. It dominates the minds of citizens, economists, business owners, politicians, other member of the European Union and so many more. All of the countries are looking to see what the UK is going to do, and if in the end they will have any say in it.
With so much uncertainty, it is not unlikely that different financial organizations are beginning to put up their walls and attempt to protect themselves from the uncertainty that Brexit brings to the UK, Ireland, and the UK as a whole.