No, a falling pound is not good. It’s a sign of weakness and decline | Dan Davies
Like the weather, the foreign exchange market changes every day and appears at the end of the evening news. Unlike the weather, though, the external value of the pound isn't directly experienced by most people, except when they go on holiday. This creates something of a cognitive vacuum - into which a lot of politicised folk theories seem to get sucked and which makes the exchange rate one of our lowest-quality debates. Now the pound has reached its lowest level against the dollar for two years as the market starts taking the possibility of no-deal Brexit seriously, meaning that sterling makes a rare appearance as a leading news story.
On the one hand, there's a tendency to regard the exchange rate as akin to the national share price, and to take pride in the fact that one pound buys more than one unit of nearly every currency in the world, apart from a few oil state dinars. On the other hand, the UK has a surprisingly vocal weak-currency lobby, based on memories of past episodes of tight interest-rate policy and of the squeeze placed on our manufacturing exports back in the 1980s, when we were briefly an oil state ourselves. To a regrettable extent, foreign exchange analysis is all about finding a story that's convenient for your (political or financial) position and telling it as forcefully as possible.
Related: What does the falling pound mean for holidays and prices?
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