Which is a consequence of a strong pound?

• A. Exports become cheaper for foreign buyers.
• B. Imports become cheaper, lowering costs for businesses that source materials from abroad, increasing their profits.
• C. Domestic products become more expensive for UK consumers.
• D. The value of the pound does not affect trade.

Answer: (B)

When the pound is strong, it has risen against other currencies. That makes imports cheaper in pounds because UK buyers need fewer pounds to purchase the same foreign goods or inputs. For businesses that source materials from abroad, this lowers their costs and can boost profit margins, since the savings can be kept or passed on to customers as price competitiveness improves.

In contrast, exports tend to lose some competitiveness when the pound is strong, since UK goods become more expensive for buyers using other currencies. That’s why the option about exports becoming cheaper for foreign buyers doesn’t fit a strong pound scenario. Likewise, a strong pound doesn’t inherently make domestic products more expensive for UK consumers (cheaper imports can offset or suppress price increases), and saying currency value doesn’t affect trade ignores how relative prices drive demand.