Economics class: The bad news for the pound is not all in the price
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
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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