Explain why a 'strong' pound might reduce the sales of steel in the UK.

A 'strong' pound means that UK steel that is exported abroad becomes more expensive. This leads to a contraction of demand for UK steel in foreign markets and as a result sales will fall. Conversely, a 'strong' pound reduces the price of imported steel into the UK domestic market. This will lead to demand switching from the expensive UK produced steel towards cheaper imported steel and so sales will fall even further.

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Answered by Sinan M. Economics tutor

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