Capital Economics optimistic about falling pound

Ryan Bembridge

July 11, 2016

coins notes pounds £

Capital Economics is optimistic about the falling value of the pound – labelling it ‘Goldilocks depreciation’.

The research consultancy reckoned it will benefit exports without pushing up inflation too sharply.

The value of the pound reached a 31 year low after the UK voted to leave the European Union.

Consumer confidence still lower than before Brexit

Capital Economics said: “The fall in the pound since the EU vote has been widely presented as a negative development. Not only is it being seen as a general indicator of Brexit vote fall-out, but many forecasters appear to think it will have a negative impact on the economy.

“But we are more optimistic. Indeed, so far at least we think the pound’s fall could even be described as a Goldilocks deprecation – big enough to have at least some beneficial effect on exports but not so big as to push inflation up too sharply.”