Businesses and Exporters welcome fall in sterling
This week's fall in sterling is a positive development for exporters in the UK, a foreign exchange specialist has said.
According to HiFX, British exporters had seen a squeeze on their margins since the start of the year, as the pound had gained six per cent against the euro during this period.
Andy Scott, premier account manager at the firm, attributed this partly to news from the Office for National Statistics that consumer price inflation dropped from 2.8 per cent in May to 2.4 per cent last month.
"The pound dropped back from a two-week high against the US dollar and a 44-month high against the euro on Tuesday after a sharper than expected decline in inflation data for June," he observed.
Continuing financial difficulties in the eurozone may have also played a part, as Mr Scott believes the euro will continue to decline against other major currencies over the coming months.
This, he said, is because "immediate timeframes" for "closer integration" between members of the eurozone have yet to be established.
Furthermore, Mr Scott noted that the euro may experience losses due to the fact borrowing costs in Spain are "still close to the seven per cent danger level".
He added that the drop in inflation in Britain justifies the Bank of England's decision to boost its quantitative easing programme with an extra £50 billion at a time when the economy remains weak.
The British Retail Consortium believes the fall in inflation has come about partly because high street retailers have been adopting a strategy of "deep discounting" in recent weeks.
Stephen Robertson, director general of the body, said this has been fuelled by "intense competition" between stores in the last few months, while shops have also had to try to attract customers during a period of unseasonably wet weather.