The end of last year was a very depressing time for those whose everyday currency is the British Pound.
During the last few months of 2022, the world’s most valuable currency slid and slid in value, causing analysts and investors alike to begin to turn their back on the Pound as the economy in Britain continued to suffer from double-figure inflation and other holdbacks such as the effect of Brexit and the legacy of the lockdowns which took place in 2020 and 2021, whereas the American economy continued to recover from its high inflation, with the US Dollar performing well throughout last year and inflation down to just over 6% by December.
Nowadays, things are somewhat different.
Whilst the United States economy continues to remain steady, and inflation is now under control to the extent that the Federal Reserve has begun to discuss the possibility of not making any further increases to interest rates for the foreseeable future after a long period of rate hikes, the British economy remains dogged by Brexit-related trade issues, double-figure inflation and a now two-year-long cost of living crisis.
Despite these having been among the same factors which caused the Pound to depreciate so much over a long period last year, there is some interesting and perhaps surprising data surrounding the British Pound this week, in that it is the best performing G10 currency of 2023.
It’s almost as if absolutely nothing has changed with regard to the challenges faced by the British public and the national economy, yet the sovereign currency has experienced a turnaround in its directionб representing a total change in fortune.
Whilst more than a degree of caution is being exercised by analysts within the financial markets industry with regard to the Pound, it has risen by a healthy 3% against the US Dollar since the beginning of 2023.
This has taken place during a period in which the US Dollar continues to perform well, just as it has done for the past year; therefore, it is not a weakening Dollar, which has made the Pound look strong – it is purely a revitalisation of the Pound’s value.
Some commentators have stated that Britain has so far avoided a recession, but that is a bit of a stretch because whilst there is not an actual recession in the accepted sense, the overall caution displayed by the public when it comes to buying everything from property to everyday items has been conservative, to say the least.
The overall fiscal position of the United Kingdom has improved steadily since 2021, which may be a contributing factor toward a rebound for the Pound against an externally gloomy backdrop, but also memories are short, and life is not too bad at all in the United Kingdom compared to many other nations; certainly, no factors have caused geopolitical unrest as has been the case in France where the national government has dabbled with the idea of increasing the pension age for certain workers due to economic forecasting, and in Israel where there have been over 700,000 protestors regularly on the streets for three months against the new government, an instability which has caused the Israeli Shekel to be the third worst performing currency all year.
In Britain, life is calm, and people have all but forgotten about Liz Truss, who was Prime Minister for all of 45 days, and her mini budget, which was considered potentially ruinous and caused the Pound to tank.
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