Forty years on, we’re still confused

Next weekend is the 40th anniversary of Harold Wilson slashing sterling’s official value from $2.80 to $2.40 and telling us the pound in our pocket had not been devalued. It was a disaster, Wilson later confessed in his memoirs: a national shame that interrupted the Swinging Sixties. And now the pound has risen above $2 to its highest level for more than quarter of a century and we rejoice at sterling’s strength, gloating over the dollar’s misfortunes.

That $2 is ‘high’ when Wilson devalued the pound to a then record low of $2.40 shows not only that today’s rate is a blip in a long-term slide from the pre-war rate of above $5; it reflects Britain’s perpetually confused attitude to exchange rates. Perhaps because our only direct experience of currency rates is converting holiday cash or planning New York shopping sprees, we regard a strong pound as good and a slide in sterling as bad.