Abu Dhabi: While the recent plunge in the British pound is expected to adversely impact sectors such tourism, retail, and property in the UAE, it’s an entirely different story when it comes to trade relations between the UAE and the UK, which are set for a boost.
The sterling has dropped by more than 17 per cent compared to the dollar so far this year, with analysts expecting the currency to continue its downwards trend. Some have even gone as far as projecting the pound may face parity with the dollar in 2017.
Naeem Aslam, chief market analyst at Think Markets UK, said he expected the pound to be at around $1.15 by end of 2016, and $1.10 by mid-2017, adding that the pound could certainly face parity with the euro in 2017. He didn’t expect the currency to fall fast enough to face parity with the dollar during the next year, though.
Alp Eke, senior economist at the National Bank of Abu Dhabi, said a weaker pound is expected to drive up UK exports globally. Eke said UAE-UK trade activity is estimated to double from the current levels by 2020.
“The value of UAE imports from the UK is approximately Dh25 billion, with the UK being the sixth largest source market for the UAE (after China, USA, India, Germany, and Japan). On the other hand, the UAE ranks 11th in UK exports …
With the Brexit, Britain will be more aggressive in establishing trade relationships outside the EU and will focus on trading hubs such as Hong Kong, Dubai, etc,” Eke said.
But even that stronger push to establish relationships might not come for another two years since the UK is yet to trigger Article 50, so until 2019 at least, the UK will still be part of the EU.