The Bank of England woke up to its very own Halloween horror story this morning: In a review of all currency markets over the last thirty days, the British pound sterling has emerged as the single worst performing player in the game.
The month-long plummet, which saw sterling hit its biggest losses since the UK’s vote to leave the European Union back in June, have been encouraged by concerns over the government’s handling of the Brexit vote.
Prime Minister Theresa May effectively fired the starting pistol on the downturn when she hinted, at the Tory Party conference at the start of October, that she’d be pushing for a ‘hard’ Brexit: a move away from the European single market.
The atmosphere of unease around this decision has contributed to the pound falling below all 150 of its currency peers, including the beleagured Romanian Leu and the Colombian Peso.
Overall, the currency is down 17% since the start of the year, and has fallen every single month since April. In this month alone, it’s fallen a mighty 6.2%.
Trick or Treat?
So, what do the pound’s belly flopping antics mean for you?
Well, holidays will be more expensive, with the pound buying you comparatively less money abroad: in some particularly ruthless airport exchange bureaus, one pound will buy you less than one euro.
The price of imported food and goods will also become more expensive, and in general the cost of living is expected to go up. It’s unlikely that wage increases will keep up with these increases, meaning we’ll all be worse off.
On the upside, inbound tourism will be cheaper, meaning more tourists will come to the country. This should boost the economy in some sectors, and make those working in tourism better off.
The price of UK-built goods will also be more competitive in global markets.
Nevertheless, it seems that the negatives of this recent slide will far outweigh the positives. And things are set to get worse: every day, it seems like the UK’s bargaining power in Europe is becoming weaker, meaning that the Brexit deal that we eventually strike will probably hit the economy where it hurts.
Another month below the Zambian Kwacha and the Seychelles Rupee? Now that’s a very scary prospect indeed.