The dollar’s rapid rise against sterling © Chris Ratcliffe/Bloomberg

This article picked by a teacher with suggested questions is part of the Financial Times free schools access programme. Details/registration here.

Specification:

  • Demand and supply, exchange rates, current account

Click to read the article below and then answer the questions:

The bad news for the pound is not all in the price

  • ‘The argument is that sentiment is so widely bearish that all the bad news is in the price and the currency is notably oversold.’ Explain what is meant by ‘bearish’

  • Using an exchange rate diagram, analyse the effects of ‘widely bearish’ sentiment on the value of sterling

  • With reference to Chart 1, calculate the percentage change in the value of sterling during the period shown

  • ‘The UK is now running a (current account) deficit equivalent to 8 per cent of GDP.’ Analyse the consequences for the current account of a weak pound

Gavin Clarke, Emmanuel College

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