The Impact of Brexit on the Pound Sterling: A Comprehensive Analysis

The decision to leave the European Union has had profound effects on the British economy, and one of the most visible impacts has been on the value of the pound (GBP). To understand the extent of the drop in the pound sterling since Brexit, we need to examine historical data and economic trends.

Historical Context and Pre-Brexit Value

Before the referendum in 2016, the value of the pound was consistently higher. On 24 June 2016, just before the referendum result was announced, the pound was trading at 1.3108 euros. This value has since fluctuated but has generally not recovered to this pre-referendum level. After the referendum result, the pound's value fell dramatically, hitting 1.20135 euros over the subsequent days.

Post-Brexit Trends

The value of the pound has continued to decline since the Brexit referendum. A chart showing the trend over the past decade reveals that the overall trend is downwards, particularly against the US dollar. This decline is not solely due to Brexit but also reflects ongoing changes in the UK's position in the global economy.

Consider the value of the pound against the US dollar from 2013 to the present day. In early 2013, the pound was trading at approximately 1.50 dollars. By December 2021, this value had dropped to around 1.2259 dollars. This represents a decline of about 18.33%.

Current Value and Future Projections

As of January 1, 2022, the pound was valued at 1.2259 against the dollar. While there have been fluctuations, the overall trend remains downwards. The European Union (EU) now trades at just 85.70 pounds per euro. Additionally, the International Monetary Fund (IMF) had previously valued the pound at approximately 1.1253 to a euro, citing it as overvalued. It is worth noting that as the UK's position in the global economy continues to shift, the pound's value against major currencies like the euro is likely to fluctuate further.

Current Value Comparison

Let's compare the current value of the pound to the euro. Before the Brexit vote, the pound was trading at about 0.92 euros, which is lower than the current value of 1.2 euros per pound. This suggests that the pound has actually strengthened somewhat against the euro post-Brexit. However, against the dollar, the pound has weakened significantly over the same period.

Conclusion

The decline in the value of the pound sterling has been significant and multifaceted. While Brexit has certainly played a role, other economic factors and shifts in global trade have also contributed to this downward trend. As the UK continues to navigate the post-Brexit landscape, the future of the pound remains uncertain, with parity with the dollar or even a further drop to below 1 US dollar per pound a possibility.

Keywords: Brexit, Pound Sterling, Currency Exchange Rates