The sterling exchange rate has been intimately linked with the most dramatic turns in British politics for many decades, including the fall of several prime ministers. In his classic 1997 history Politics and the Pound, Philip Stephens concluded that “the pound has haunted British politicians for most of this century”.
The value of sterling is so central to national events that it even plays a role in Netflix’s new series of The Crown, where Harold Wilson is shown as a prime minister desperate to secure US financial support to prop up the currency in the mid-1960s. He didn’t succeed, and sterling was devalued in 1967. The outcome was seen as a major national humiliation, the economic equivalent of Suez.
Since then, there have been further notable occasions when sterling has fallen by 15 per cent or more in 12 months: the IMF crisis in 1976, the UK’s ejection from the Exchange Rate Mechanism in 1992, the financial crash in 2008 and the EU referendum in 2016.