The British Pound continues weak performance due to uncertainties regarding Brexit and the means to execute it. Due to the constant declines in the sterling, many businesses in the UK have been affected badly, as the domestic sales margin are decreasing continuously based on survey results released by the British Chambers of Commerce.
Sterling is presently trading at 1.2472 0943 GMT against the US dollar, down 0.36% from the start of the session.
UK Business Status on Weak Pound and Brexit
The British Chambers of Commerce has conducted and posted survey results of its International Trade Survey. According to the survey, the weak sterling has led to higher cost base for UK businesses, while it is likely for the prices of products and services to go surge even more.
The survey was conducted to around 1,500 British businesses, in partnership with Moneycorp, and indicated that the recently weak Sterling has had a negative impact on the business sector of the nation. A 44% decline on domestic sales margin was already experienced by almost half of the businesses surveyed.
“The depreciation of Sterling in recent months has been the main tangible impact that firms had to grapple with since the EU referendum vote,” said BCC Director General Adam Marshall.
Meanwhile, for the export margins, the results had almost even positive and negative effects, with 25% stating that the weaker pound has had a positive impact to their businesses, while 22% of the business stated the contrary. The findings suggest that the devaluation of the British pound has had mixed impacts on varying services sector in the UK.
Other businesses also believe that if the sterling will continue plunging against other currencies, their cost bases will increase in the coming year, while more than half (54%) of the companies stated that the weak pound will lead the prices of products and services to go higher over the year.
The Institute of Chartered Accountants from England and Wales also published a report regarding the matter. It stated that numerous firms has expressed that they are expecting that while sales will grow stronger, the input costs to counter the effects will also rise.
Since the announcement of the UK European Union referendum, the British pound has already lost more than 15% against the US dollar last June 23. Sterling has suffered so much since the nation voted to leave the EU and from then on, pound has experienced fluctuating value in the forex market.
At present, sterling is trading 0.08% lower against the greenback at $1.2472 0943 GMT. It’s trading higher against the euro currency, 0.28% higher at 1.1607. The currency is now at 51.6499 on the RSI, constantly being on the mid-range level between 30 and 70. Last week, the pound lost almost 2% against the greenback due to the many challenges faced by the British Government led by UK Prime Minister Theresa May and their plans for triggering Brexit.
The British pound is currently strongly politically influenced until Brexit talks are brought to a proper conclusion.
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