Yesterday, the sterling pound fell to another record low. This means that the pound has fallen to its weakest point in over 50 years, since Black Wednesday back in 1992. At this rate of depreciation, the pound will be worth under $1 by the end of this year and may not even be worth a penny by next year.
What is a sterling pound?
The United Kingdom and nine of its affiliated territories use the sterling as their currency. The pound is the primary unit of sterling, and the term “pound” is also frequently used to refer to the British pound or the pound sterling in international settings.
So how did we get to the point where Britain’s currency is worth less than a penny? Why is Britain so weak that all it takes is a few hours of bad weather to see wages and prices fall so drastically that many people will not be able to afford food, heat, or medicine? What is the reason that all of this is happening now?
These questions are the subject of a large group of books written by groups with various political views. There are some who blame foreign governments for trying to hurt Britain and boost German exports. There are others who blame George Soros, famous for his financial speculations against the pound.
The reason for the downfall of pounds
this is simple: the government has been printing money to cover its spending while raising rates at the same time. Investors are taking their money out of Britain and putting it elsewhere.
The pound’s fall has been rapid and steep, with several suffering losses in a short period of time. At one point, the pound fell by 1.9% in a single day, reaching its weakest level since 1985. In its latest downturn, it fell as low as $1.1849 before recovering to $1.2063 at the close of trading in New York on Thursday. This is an official record low for the currency and a sign that there is no end to the landslide for sterling in sight.
The fact that the pound has hit its lowest level since Queen Elizabeth II took the throne in 1952 is also a measure of how unprepared Britain is for the world after Brexit. Having chosen to leave Europe’s single market, the country will have no choice but to strike new trade deals, which could take years to be finalized. This will lead to a period of uncertainty, which usually makes investors pull their money out of markets they see as risky.
Frustratingly for Britain’s prime minister, Theresa May, and her ministers, who are working hard to strike new trade deals in the US and other markets, this depreciation is taking place before negotiations with Brussels have even started.
Summary
The pound has fallen to its weakest point in over 50 years, since Black Wednesday back in 1992. At this rate of depreciation, the pound will be worth under $1 by the end of this year and may not even be worth a penny by next year. The pound has hit its lowest level since Queen Elizabeth II took the throne in 1952. At one point, the pound fell by 1.9% in a single day, reaching its weakest level since 1985. This depreciation is taking place before negotiations with Brussels have even started.
