British Pound hits the lowest level in 3 years against the dollar

//British Pound hits the lowest level in 3 years against the dollar

British Pound hits the lowest level in 3 years against the dollar

BBC: Pound hits three-year dollar low in Brexit turmoil

Article published: Sep 2, 2019

IB Economics syllabus: International economics (exchange rates)

No-deal Brexit is becoming a likely scenario for the United Kingdom to leave the EU and if it becomes reality, only one thing will be certain: uncertainty. But, as the article mentions, “[c]urrencies, as a rule, do not like uncertainty.” As a result, this has led to the fall of the GBP (British Pound) against the USD. You can represent this in an exchange rate diagram with a fall in demand for the British currency leading to its depreciation. As for the evaluation, make sure you talk about the pros and cons of the freely floating exchange rate system as well as what could be done to in the UK to restore business confidence.

Furthermore, note that there was a time – back in the 1990s – that the Bank of England had a managed exchange rate system, but this ended on Black Wednesday.

Source of image: Getty images

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By | 2019-09-03T09:24:27+00:00 September 3rd, 2019|International Economics|Comments Off on British Pound hits the lowest level in 3 years against the dollar

About the Author:

My name is Daniel Szekely and I work as an IB Economics tutor, examiner and teacher. Having earned an MA degree in Economics at the University of Aberdeen, I started my career as a financial analyst at Morgan Stanley, one of the largest investment banks of the world. Yet, despite the promising career prospects of the banking industry, I decided to make a larger social impact by becoming a teacher. Currently, I teach IB Economics at SEK Budapest International School and have been an examiner for over 8 years. I started EconDaddy as a simple blog to share great articles with my students and others taking IB Economics around the world to use for their commentaries. Being a practicing IB Economics tutor, I have first hand insight into the most common mistakes of students, so the EconDaddy blog now also provides exam and commentary writing tips.

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