UK pound under pressure

From the FT – a weaker pound makes imports more expensive raising prices in the shops and eroding the real value of their earnings and savings. If the pound falls against other currencies, it makes those of us whose earnings or savings or investment income is in pounds poorer. However with a weaker exchange rate it should makes UK exports cheaper – but this doesn’t seem to be the case as although the pound depreciated significantly after the GFC it had little or no effect on the trade balance. Companies that rely on imports haven’t been able to reduce their price as the overall production cost has increased.

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