Recently I noticed that the 1 USD was worth 0.8 GBP and now it’s worth 0.78 GBP. Not much deal to an average consumer. What does that mean for the economy for both countries and what does it tell about the relative strength of both currencies?
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When the value of currency goes down, it makes the exports more competitive and decreases imports as people can’t afford them as well. That usually makes the money flow into the country, making currency more valuable, etc. The other way around the money flows out the country, decreasing its value, etc. So it’s that sort of balancing act. The absolute value of currency means nothing, only what the trend is at any point in time.
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