Brexit weakens pound to worst-performing major currency in the world – Metro.co.uk

The Great British Pound has not been doing so well lately.

In fact, it’s fallen to its lowest value since 2017 and has become the worst performing major currency over the past month and year.

As the country faces a leadership contest and the looming prospect of crashing out of the European Union without a deal, things do not look likely to pick up anytime soon.

The currency dropped to its lowest level against the US dollar since 2017 and has reached its lowest value against the Euro in six months, according to Bloomberg.

Despite a strong start to 2019, it has managed to sink to the bottom of the performance chart for the world’s top 10 major currencies.

It’s not great news for Brits going abroad, with a mere 1.1 exchange rate to the Euro and a 1.24 rate for the dollar.

This compares to 1.44 and 1.55 conversion rates with the Euro and USD in July 2015.

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Economists say the fact that Conservative Party leadership candidates Boris Johnson and Jeremy Hunt oppose Theresa May’s Irish backstop makes a no-deal scenario much more likely – denting the pound’s value.

Commerzbank AG strategist Thu Lan Nguyen said only two options are left, ‘no-deal Brexit or no Brexit’.

She added: ‘As both Johnson and Hunt have made clear they want Brexit, chances of a no-deal Brexit are rising.’

But a weak currency is not always a bad thing for the economy.

It can help boost a country’s export economy as foreign buyers can get more products for their money with a favourable exchange rate.

The only problem is that the UK has had a trade deficit of £12.6 billion in the three months to May 2019 – meaning the country imports far more than it exports.

The currency’s eight per cent drop against the US dollar after Britain voted to leave the European Union on June 23, 2016 was its biggest one-day fall since the early 70s.

Money markets have predicted a 50 per cent chance of the Bank of England slashing interest rates in 2019 due to crashing out of the EU on World Trade Organisation terms.

Lower interest rates tend to lower a currency’s value and put off foreign investors, but cutting them can persuade people to spend rather than save, which can help boost the economy.

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European Union negotiators are bracing themselves for more hostile talks with whoever replaces Theresa May as Prime Minister after she leaves Downing Street on July 24.