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Currency woes put squeeze on Britain

cash-flow

A soaring dollar and a falling euro are combining to create a perfect storm for British businesses, with raw material prices being driven up as exporting to the Eurozone becomes more difficult. Sterling fell against the dollar to a five-year low of $1.4710 on Friday while remaining virtually unchanged against the euro at €1.40, which is near to a seven-year high. This is the culmination of a 3.6% rise against the euro and a 4.5% fall on the dollar over the past month, which extends to 8.6% and 7.7% respectively over a four-month period. Analysts see the euro's plight as the greater concern because the dollar's rise is being mitigated by the fall in oil and food prices in dollar terms. However, the diverging exchange rate is proving beneficial for some companies, with importers from the Eurozone, exporters to the US and firms reliant on American tourists all cheering the situation.

 

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