Weak pound takes the shine off booze cruises

Majestic Wine, which runs two stores in Calais and one in Cherbourg, suffered a 56% decline in profit, largely due to fewer travellers heading to France in search of cheap alcohol. The company is blaming the weak pound for its problems. I’ve written some GCSE style questions to go with this article for revision.

1. How are exchange rates determined? (4 marks)

2. Explain why a weakening pound would reduce sales at Majestic Wine’s French based outlets (3 marks)

3. Evaluate the likely economic effects of a weakening pound on the following groups of people
(i) UK tourists visiting Germany
(ii) UK manufacturers
(iii) Spanish tourists visiting the UK (9 marks)