Talk of a ‘sterling crisis’ has emerged this week after further falls took the pound below $1.23 – 25 per cent below its long-term average rate.
Since Britain voted in June to leave the European Union, sterling has tumbled about 16 per cent.
As currency markets are a barometer of a nation’s economic health and prospects, relative to other markets and economies, many fear that investors are losing faith in the UK after the Brexit vote.
Others argue speculative forces have exaggerated sterling movements and suggest the fundamentals of the UK economy are sound – and likely to benefit from the weaker pound, which corrects an overvaluation.
Freefall: The pound has fallen to its lowest level against the US dollar since 1985
And with US rates expected to go up well before UK rates, and the prospect of more QE in the UK, sterling was always going to come under pressure.