What is the rate of the pound now?
It is now at $1.12 against the US dollar, showing a fall of up to 17% against the US dollar since the beginning of this year.
The powers of UK’s King Charles III
What are the powers of UK’s new monarch?
The monarchy was passed on to King Charles III, the former Prince of Wales, on September 8 after Queen Elizabeth II, the longest-reigning monarch in British history, passed away.
In contemporary Britain, the monarch’s function is primarily ceremonial. British monarchy reWhat are the powers of Britain’s new monarchigns but does not govern, said University College London (UCL).
What has caused the decline?
There seem to be several reasons for the decline in the foreign exchange rate of the pound, given as follows:
- The strength of the US dollar is one of the reasons. The dollar is at its highest in twenty years against several different currencies. It has been due to the significant interest rates charged by the Federal Reserve system of the United States of America.
- As inflation is prevailing in the UK, borrowing is less due to its high cost and interest rate increase, making people spend less. However, the mini-budget idea of UK Chancellor Kwasi Kwarteng might increase borrowing. The Office for Budget Responsibility has not yet given the forecasts, thereby increasing people’s fears.
- Markets can only assume who will consider loans when the government is busy increasing the borrowings, said RBC Capital Markets. Although the official interest rate of the Bank of England has increased and is sure to do so again, that was not the main reason.
Impact of the pound’s rate falling
It is likely to increase the country’s exports while showing a decline in imports as prices of foreign goods, mainly from the USA, will be available at a higher cost now.
Frequently Asked Questions (FAQs)
What is the forecast for the GBP?
According to the predictions, the pound might drop below $1.05, which would be a record low.
What is a Foreign Exchange Rate?
The price of one unit of the local currency expressed in another is known as a foreign exchange rate.
Disclaimer Statement: This content is authored by an external agency. The views expressed here are those of the respective authors/entities and do not represent the views of Economic Times (ET). ET does not guarantee, vouch for or endorse any of its contents nor is responsible for them in any manner whatsoever. Please take all steps necessary to ascertain that any information and content provided is correct, updated, and verified. ET hereby disclaims any and all warranties, express or implied, relating to the report and any content therein.