The low pound exchange rate – will anything change?

Although historically it is a very strong currency, there is no denying that since 2015 the pound’s position has fallen sharply. For many of us this is bad news - any savings we hold in British pounds lose value as a result. But is there a chance the situation will soon turn around?

The main reason for the fall in the value of the pound is, of course, Brexit. The moment the results of the referendum on the United Kingdom leaving the European Union became clear, the pound’s exchange rate dropped sharply. This is hardly surprising - the United Kingdom’s confirmed exit from the EU is unprecedented, and the country’s economic future has been very uncertain ever since.

There are circumstances in which a fall in a currency’s exchange rate brings benefits. In countries with a low exchange rate, exports have great growth potential because of their low price, which is why some countries use the strategy of lowering the value of their own currency. This helps strengthen the country’s economy by supporting local producers. Unfortunately, we can only really speak of benefits when the devaluation is deliberate and controlled - and in the case of the United Kingdom and the pound’s exchange rate in recent years, that is not the case.

It is obvious that the pound’s fluctuations affect the money earned by Poles abroad. One of the main reasons so many Poles emigrated to the UK was that, at the time Poland was joining the Union, the pound had a very high exchange rate. Poles earning in the UK could therefore send or bring pounds to Poland and exchange them for zloty at a very favourable rate. But now, when the political situation is so uncertain, the pound-to-zloty rate is so low, and leaving the Union is tied to a change in immigration policy, the situation may change dramatically. For now, however, it is too early to say how it will look.

It is also worth noting that in recent months the pound’s exchange rate has edged upwards. This may be because the details of the bill on the United Kingdom’s exit from the Union are becoming increasingly clear. As a result, the future of the British economy is less uncertain. The outlook is therefore good, but it is still not certain how lasting this situation will be.