Fall From Grace

摘要

After a decade in which it rode high on the foreign exchanges, sterling has been plumbing new depths. Predictably, this has rekindled the acrimonious debate over whether Britain should join the euro. In fact, the pound's recent weakness has reinforced the economic case for staying out. Since its latest peak in July 2007, sterling's trade-weighted value has sunk by a quarter. The fall, which exceeds the depreciation after Britain was turfed out of the European exchange-rate mechanism in 1992, has passed through three main stages (see chart). First the pound weakened against the euro in late 2007 and early 2008. Then this summer it started a steep drop against the dollar. In November sterling's decline against the euro resumed, falling below €1.10 on December 17th.