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Is a feeble pound a thing that is bad or great?

Oct 21, 2016 | Money

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Since the Brexit vote on June 23, the value of the pound has dropped almost 20% against the dollar.
Some argue that a devalued pound is an excellent chance for British exporters and the natural effects of a currency which has been over valued for too long.
Others make the case that it’s a damning indictment of the global finance market’s lack of faith in the UK’s prospects in a post-EU world, and will have a horrendous impact on the money we pay for services and goods.
We’ve asked owners, managers and specialists from businesses across the nation what they think… to get a balanced viewpoint
Evdokia Pitsillidou, manager of risk management at online trading platform, easyMarkets
There are winners and losers to a weaker pound.
Tourists coming to the UK from abroad, uK exporters, foreign investors and local businesses earning profits from overseas all stand to gain from a poor sterling.
But companies and foreign workers in the UK are losing out.
The equity markets have fared the storm well, largely because many of the businesses incorporated in the FTSE 100 are diversified geographically.
On the other hand, smaller companies that are more reliant on the local marketplace have been feeling the pinch.
Drop of government bond yields and Exchange rate changes have meant greater unpredictability that might result in losses on balance sheets.”
“For our business a British pound that is feeble is definitely a bad thing.
We’ve already seen a 10% increase from quite a lot of our garments manufacturers, particularly those based in the united states and Central America.
The main difficulty we face is businesses like us and the clothing retail sector rely hugely on imported products, even if the printing and customisation is done in the united kingdom and hence that there are practically no UK clothing producers.
If the British pound continues to drop, then the price to the end consumer must rise.
And although everyone in our business will be in the same boat, at a time where other costs are growing and confidence is low, it merely means spending will fall and that companies must tighten their belts.”
Matt Deighton, managing director at Lancashire-based furniture company, Couches by Saxon
“It really is a double-edged sword.
From a positive outlook as an UK exporter our furniture is now more attractive to foreign customers as a result of weakening of the pound which may result in an increase in export sales.
Counter to this we’re already seeing an increase in raw material prices because of the weak British pound as several our raw materials are sourced from Europe.
Total in the short term there are less positive outcomes connected with the feeble pound than favorable.”
Ray Withers, CEO of Property Frontiers, a firm which helps individuals looking to put money into property abroad
The british pound’s ‘flash crash’ and limited restoration has empowered international buyers to make enormous savings on UK property.
British bricks and mortar cannot be up to 20% more expensive than before the Brexit vote back in June and that’s proving extremely attractive.
We have seen a recent surge in interest, particularly from Chinese investors.
But those with pounds to spend may additionally favour to invest them at home as opposed to purchasing abroad to prevent pain on the currency exchange.
In a nutshell, a weaker pound makes British property look much more competitive to buyers holding foreign currencies – including British expats.”
Max Wiseberg, CEO and inventor of all-natural anti-allergen merchandise, HayMax
“The poor pound is both a good and a bad thing.
Because we buy British we can, theoretically us should not hurt and ought to stand us in good stead. We should get the benefits of our products being more affordable abroad.
It might help us raise our export business which would be useful.
So, we might, in turn, have to pay increased prices.”
Doron Cohen, CEO of online cross-border payment service Covercy

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