I know there are lots of reasons for currency to appeciate or depreciate, but I don't know the exact reason. Can someone tell me?|||Increase in competitiveness. This is related to lower inflation. If a country becomes more competitive because of increased labour productivity then there will be more demand for UK goods and the exchange rate.
Inflation Rates. If inflation in the UK is lower than elsewhere then it makes UK goods relatively more attractive. Therefore there is an increase in demand for UK exports and therefore higher demand for sterling this will cause an appreciation. This is a significant factor in the long term.
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