1. Introduction
In today's global economy, the exchange rates between countries play a vital role in determining the overall trade and economic growth. Exchange rates reflect the relative strength of one country's currency to another, and they are affected by several factors, such as economic conditions, political uncertainty, and other external shocks. This article aims to provide a forecast for the future trend of the pound sterling to the Chinese yuan exchange rate.
2. Historical Exchange Rate Trend
The pound sterling to the Chinese yuan exchange rate has been volatile in recent years. In 2015, the pound was trading at around 9 yuan, but by 2019, it had dropped to around 8 yuan. The steep decline in the pound's value was largely due to uncertainties surrounding Brexit, which impacted the UK's economic growth outlook, and consequently, the currency's value. Before the pandemic, the pound was showing signs of recovery, and in December 2019, it rose to its highest level against the yuan since mid-2018, trading at around 9.2 yuan.
3. Current Factors Affecting the Exchange Rate
Several factors are currently influencing the exchange rate between the pound and yuan. The ongoing Covid-19 pandemic has taken a severe toll on the global economy, impacting the demand for goods and services and disrupting supply chains. The pandemic's economic impact has disproportionately affected the UK compared to China, which has managed to contain the virus's spread effectively. This divergence in economic conditions is negatively impacting the pound's value against the yuan, which has been hovering between 8.9 to 9.1 yuan in the last few months.
4. Future Outlook and Forecast
Looking ahead, several indicators suggest that the pound's value against the yuan could rise in the coming months. Firstly, the UK's rapid vaccine rollout has been very successful, and the government has recently announced that it plans to lift all pandemic restrictions by mid-summer. This should help boost the UK's economic growth outlook and provide support to the pound. Secondly, the US, the UK, and other western economies are beginning to recover from the pandemic's impact, which will help boost demand for goods and services from these countries. This could positively impact the pound's value against the yuan as the UK's exports to China could increase. Considering these factors, it is plausible to expect the pound to recover and potentially trade between 9.2 to 9.5 yuan by the end of the year.
