Sharp Drop in Pound Value Amid UK Recession Fears... Largest Decline Since Brexit

[Asia Economy New York=Special Correspondent Joselgina] Concerns over a recession in the UK have grown, causing the British pound to fall against the US dollar last month at the largest rate since Brexit (Brexit·the UK's withdrawal from the EU).

On the 1st (local time) in the foreign exchange market, the value of the pound against the US dollar dropped about 5% last month, marking the largest decline since the Brexit decision in 2016. The pound had fallen about 8% in June 2016, when the Brexit vote took place, and 6% in October of the same year.

The pound is trading around $1.15 on the day. This weakness is interpreted as a result of not only the strong dollar but also concerns over the UK's economic recession. The Bank of England (BOE), the UK's central bank, forecasted that inflation this year will exceed 13% and that the economy will enter a recession starting from the fourth quarter.

The outlook is not favorable. Capital Economics predicted that the pound's value will fall to $1.05 by mid-next year, which would be the lowest in 37 years. Nomura International projected $1.06 by the end of next year.

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