Indeed, but not as worse as I expected. Since the announcement of Britain leaving the European Union in the summer of 2016, it was obvious that GBP will suffer depreciation. However, I noticed that there have been many fluctuations in the past 3 years, and that GBP has increased lately considerably after the worst depreciation registered.
Why is the situation of GBP important?
I think that the British pound represents a main currency in the foreign exchange market. This is why its currency fluctuations and depreciation can have negative effects. According to Alvarez-Diez, Baixauli-Soler and Belda-Ruiz (2018) a weaker GBP affects international traders and the global business. This is also possible because the British economy is the fifth largest economy in the world and “against the US $, the GBP £ depreciated to its lowest level in 31 years and moved to £1=$1.21” (Nasir and Simpson, 2017, p.231). Moreover, the GBP depreciation has led to inflation and affected trade balance in UK (Nasir and Simpson, 2017). Considering all above, I am not surprised that the lack of stability of the prices and the trade deficits, which Britain is dealing with, has negative effects for international business. Not to mention that there are so many foreign companies and banks running in Britain! I am sure that they do not desire higher costs and economic instability.
The lesson?
By making the decision to leave the European Union, Britain assumed its risk of having the British pound depreciated. But, I think that Britain should have also considered the consequences of their currency depreciation on the international market.
The Investigator 