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If the fall in the pound is correct has the currency been overvalued for years?

While the fall in the rate of sterling against the euro has caught the headlines the currency has also fallen against the likes of the dollar which has serious implications for both import and export businesses in the UK. However, many people are now wondering, as the currency continues to collapse against the leading currencies of the world, has sterling been overrated and overvalued for many years?

The truth is that there has been such a significant shift in the stature and strength of the UK economy and this has prompted the collapse in the exchange rate. When sterling was two dollars to the pound this reflected an upbeat and generally strong UK economy which appeared to be more stable and predictable than its US counterpart. However, even though the US economy is under serious pressure this is nothing compared to the problems in the UK and the firefighting which the government is having to take on at the moment.

While the situation could and should reverse in due course there is no guarantee that we will see sterling return to former exchange rates even years into the future. So significant has been the shift that some are starting to express serious concerns about the long-term health of the UK economy.

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