Exchange rates: Sterling has summertime blues

Weighed down by the UK’s increasingly bleak economic outlook, sterling felt the full impact of the dollar’s resurgence in August.

There was no nice summer holiday for the UK’s currency in August. The pound found itself under extreme pressure and a combination of factors combined to send it sharply lower, especially against a resurgent US dollar. The exchange rate plunged from just a shade below $2 to the pound to a little above $1.80, its largest monthly fall since the distant days when sterling was pulled unceremoniously from the old European Exchange Rate Mechanism on September 16 1992.