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Why does a weak British pound matter?

23rd March 2023

Why does a weak British pound matter?

The pound has had a lot of push backs in recent years. As we try to grapple with the state of the economy, unfortunately, when the pound suffers, the cost of living rises. 

If you’re wondering how the value of the pound affects your financial situation, read on to find out more about how a weak pound could impact your money.

A rising concern about the value of the pound

We recently carried out research on how the cost of living crisis is affecting people and our customers across the UK. After surveying 2,000 people with a salary from £18k to more than £100k, we found  61% were concerned about the falling value of the pound.

While people aged between 31 and 60 are most concerned about the pound's falling value, women are also slightly more worried about it than men. So, why does a weak British pound matter?

With many of us continuing to worry about its value, we’ve listed how a weak pound could affect your money.

What does the value of the pound mean for us?

A rise in costs

The main impact the falling value of the pound has on our customers is that the cost of living rises.

If the value of the pound goes down, then the cost of buying goods from overseas goes up. This means oil, gas and everyday products  which are imported from overseas, go up in price too. As a result, we have to spend more, putting more pressure on the cost of living as necessities like petrol and food are more expensive to buy.

An increase in interest rates

A weak pound also affects interest rates. The drop in the value of the pound pushes up inflation as the cost of goods rises too. This means  interest rates go up as the banks try to counter higher inflation and the demand for credit increases, so the interest rates on borrowing money could be higher than usual. On a more positive note, a rise in interest rates can mean higher rates on your savings account too. Read our blog on the advantages and disadvantages of savings here.

An impact on your mortgage

As a result of interest rates rising, your mortgage could be affected if you’re on a tracker and not a fixed rate. A lot of homeowners can see their monthly payments go up if they’re on tracker mortgages or a variable rate and interest rates are pushed up.

A rise in interest rates also affects people who are in the process of buying a home and borrowing money. The hike in interest rates can make it difficult to borrow money for a mortgage as it can price them out due to uncertainty.

 We offer a range of mortgages via mortgage brokers. Take a look at our various mortgage products here.

A risk to your pension

When the value of the pound drops, British bond prices can fall. In a worst-case scenario, this can affect people who are approaching retirement as their government bonds are shifted and UK pension incomes may be worth less than a year ago.

If you’re already retired, then a weaker pound can push up inflation, meaning s as the cost of living rises you have to spend more on everyday necessities. Potentially eating eat into your pension and forcing  you to  be more careful with your spending.

Financial support for you

If you have any concerns about managing  your money, we have a hub full of information and resources to support you. Click here for more.

This article is correct at time of publishing and for general information purposes only. We recommend you speak to a professional financial adviser for advice. You can find a financial adviser and further personal finance information at

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