As the road to Brexit continues, it was announced this month that the British pound has reached a new record low this year against the dollar, and has fallen further against the euro too.
The news of these falls comes despite an increase in the interest rates of the United Kingdom – a factor which usually increases the value of the British sterling. Since the start of August, the pound has fallen a shocking 1.7% against the dollar, marking the first time in nearly a year that the pound has fallen below $1.29.
The euro-pound rate has been relatively stable this year but the pound has now also suffered a fall of a slightly smaller but still significant 0.8% against the euro. These drops come as fears of Britain failing to reach a trade deal before leaving the EU grow even further.
Many were left surprised at the results of the sterling’s new value, due to the increase in interest rates from the Bank of England which were raised in July. Interest rates were increased despite not meeting retail forecasts the previous month. The Office for National Statistics revealed that sales fell by 0.5% in June compared to May – falling below the forecasts of a 0.2% rise. It is thought that the World Cup and hot weather contributed towards the drop in retail sales; while these two factors encouraged food and drink sales, they also caused shoppers to avoid the high streets.
With the pound’s value being slightly unstable this year, UK businesses are being forced to adapt in order to continue thriving in the economy’s recent climate. Based in the West Midlands but supplying nationwide, the UK’s longest established hose supplier Winster Ltd have revealed the impact that the weakening pound is having on their business.
Managing director Val Gardner said “The pound’s weakening against the dollar has definitely put pressure on our business in terms of securing and safekeeping the company profits. We are a business that deals majorly with other wholesalers, and so maintaining profits for our customers as much as ourselves is a key part of being able to keep Winster Ltd a success.” In order to resist jeopardising the company’s profits or that of their customers, Winster Ltd have invested in a specialised FX strategy over the past 12 months which has thankfully paid off. Not taking any chances however, the company will be continuing to monitor this over the upcoming 12 months too.
However, due to the company’s relationships with businesses outside of the UK, Winster Ltd alongside their export business clients are reaping the benefits of the pound weakening against the euro. Val said “It is working both ways for us at the moment. Our customers in the export industry are gaining more business growth, which in turn means we see more business too!”.
The company is undoubtedly one of many establishments in and outside of the UK that will be facing an impact from the rise and fall of the pound’s value in recent months. It is hoped that once a trade deal with the EU is secured, stability of the pound’s value will recommence once more.
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