Mixed picture for sterling over the past 12 months

13 July 2015

Mixed picture for sterling over the past 12 months

  • The pound outperforms 9 of the 16 currencies in the G202 group of                     economies
  • Sterling has declined in value against 30 out of 61 currencies and increased against 30

The pound has had a mixed performance against the world’s major currencies over the past year1, according to latest research from Lloyds Bank Private Banking. During the last 12 months the pound declined in value against 30 of the 61 currencies analysed and increased against 30.

Trinidad & Tobago dollar performs best against the pound

The Trinidad & Tobago dollar has been the top performing currency against the pound over the past year, rising by 10%. The Chinese renminbi (9%), Maldives rufiyaa (9%) and the US dollar (9%) have been the next best performers. (See Table 1)

Economic problems in Ukraine, Russia and Brazil have resulted in considerable falls in these countries’ currencies

Nearly one in four - 13 of the 61 - currencies surveyed have declined by over 10% in value against sterling since July 2014. 

The Ukranian hryvnia has recorded the largest decline against the pound, falling by 62% over the past year. The Ukranian currency has continued to fall as a result of the country’s ongoing economic crisis and political problems as fighting has continued in eastern Ukraine.

The Russian rouble (-48%) and the Brazilian real (-29%) have been the next biggest fallers. Lower oil prices, Western sanctions and a sharp fall in the Russian currency caused the economy to contract in the first quarter of this year. Large external imbalances, high inflation and deteriorating confidence have pushed Latin America’s largest economy to the brink of recession with GDP falling 0.2% in 2015 Quarter 1.

The euro area and a number of Eastern European countries have also recorded substantial declines in value against the pound over the past 12 months. (See Table 2)

Richard Musty, International Private Bank Director at Lloyds Bank, commented:

"Sterling has had a very mixed performance over the past year. The pound has appreciated against those economies that are facing particularly severe problems such as Russia, Ukraine and Brazil.

UK travellers going to much of Europe will have benefited from the further reduction in the euro’s value against the pound. Those going to the US or China, however, will find that their money goes less far.” 

Pound outperforms 9 of the 16 currencies in the G202 group of economies

Amongst currencies in the G20, the Russian rouble and the Brazilian real have seen the biggest falls against the pound over the past 12 months. The euro (-12%) and the Japanese yen (-10%) have been the next biggest losers against the pound. These falls have reflected general weakness in both the Eurozone and Japanese economies. Whilst revised data confirms that Japanese growth strengthened in 2015 Quarter 1 - mainly due to favourable labour market conditions and solid corporate profits - recent economic indicators highlight that growth remains fragile.

The Chinese renminbi and the US dollar have recorded the biggest rises against sterling amongst the G20 currencies, both gaining 9% over the past 12 months. Whilst the Chinese economy has cooled, growing by 7.4% last year, and forecast by the International Monetary Fund to slow to 6.8% this year and 6.3% in 2016, it continues to grow considerably more rapidly than advanced economies.  The dollar has generally strengthened on the currency markets as a result of relatively strong economic data over the past year. (See Table 3)

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