The British Pound Continues to Weaken: What are the Impacts?

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Adi Ahdiat 28/09/2022 14:40 WIB

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The weakening of the pound could lead to higher prices for essential commodities in the UK, even increasing the risk of recession.

British Pound to US Dollar Exchange Rate (September 28, 2021 - September 27, 2022)

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The British Pound Continues to Weaken: What are the Impacts?

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British Pound to US Dollar Exchange Rate (September 28, 2021 - September 27, 2022)

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The British pound has been steadily weakening against the US dollar over the past year.

According to Yahoo Finance data, on September 28, 2021, one pound was worth approximately US$1.37. However, a year later, on September 27, 2022, its value had fallen to US$1.08, a decrease of about 21%.

According to the British newspaper, *The Guardian*, the decline in the pound's value is partly due to the increase in the US Federal Reserve's benchmark interest rate.

This is expected to lead to higher prices for essential goods in the UK.

"Oil is one of the UK's main import commodities, and its price is set in US dollars. A weaker pound will make vehicle fuel more expensive," explained *The Guardian* on Monday, September 26, 2022.

"The UK also imports more than 50% of its food supply, so the cost of food, from vegetables to bananas, will rise," it continued.

Separately, an economist from S&P Global believes that the UK economy will continue to weaken, risking a recession.

"UK economic pressures deepened in September as business activity declined, suggesting the economy is likely to fall into recession," said S&P Global's Chief Business Economist Chris Williamson, as reported by *Reuters* on Friday, September 23, 2022.

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."