A year on from Brexit, how is the pound doing?

A year on from Brexit, how is the pound doing?

A year on from the EU referendum we thought it would be interesting to see how the pound is now doing against the other major world currencies. There is no doubt that the pound was one of the worst affected areas by the Brexit decision. Immediately after the UK announced its intention to leave the EU, the pound fell from an average of around 1.5 against the dollar to 1.33 in literally a few hours.

In the months after the decision, the value of sterling stayed between 1.2 and 1.3 against the dollar and it remains that way now, with the pound at 1.29 against the dollar in early June.

Compared to the euro, it’s been a fairly similar story. Prior to the Brexit vote, sterling was worth about 1.3 against the euro. In the immediate aftermath of the referendum, the pound fell quite dramatically and on more than one occasion over the last 12 months, the pound and the euro have been nearly level pegging. One year on, the pound is approximately 1.15 against the euro so it still hasn’t fully recovered.

Looking at other major currencies, the pound has dropped against the Japanese yen, where pre-referendum it was around 156 and it’s now 141. Against the Saudi riyal it has fallen from 5.58 to 4.8 in this space of time.

Clearly, the fall in sterling has been good for UK exports and for overseas buyers looking to invest in UK property. However, for UK imports this has been difficult and it’s starting to have an effect on inflation and consumer spending power.

Now that the Brexit talks have started in earnest, it will be interesting to see how the pound reacts to the ongoing negotiations. The jury is out on whether it will ever get back to its former value.