Britain – the land of the $5 ice cream?
The fall in the dollar has continued with the value of sterling rising above $2.10 for the first time in 26 years. The articles below look at a range of issues related to the strong pound and there are also case studies of the impact on a guitar strings company and the manufacturer JCB.
Pound breaks through $2.10 level BBC News Online (7/11/07)
Strong pound weighs on manufacturers Guardian (23/11/07)
Fears over tourism to UK as Britain becomes the land of ‘the $5 ice-cream’ Times Online (8/11/07)
Dollar continues near record lows BBC News Online (19/11/07)
Manufacturing abroad helps JCB weather currency turbulence Guardian (31/10/07)
Guitar strings company hit hard by exchange rate Guardian (31/10/07)
UK businesses feel the pinch as sterling hits 26-year high Guardian (31/10/07)
Strong pound burns a hole in our pockets Guardian (19/11/07)
Questions
| 1. | Identify the main factors that have caused the fall in the value of the dollar. Use supply and demand to illustrate your answer as appropriate. |
| 2. | Assess the impact of the strong pound on UK exporters and importers. |
| 3. | Discuss whether intervention in the foreign exchange market may be appropriate to help UK exporters to remain more competitive in world markets. |