The UK exchange rate is the main factor affecting the current account deficit

The UK exchange rate plays an important role in influencing the current account deficit of the country. When the British pound is strong and the exchange rate is high, the prices of UK exports become higher for foreign buyers, making them less attractive and thus reducing UK exports. At the same time, prices of imports into the country become more attractive due to the strong pound, increasing the demand for imported goods and services. Thus UK imports increase while UK exports decrease, causing a widening of the current account deficit. Similarly, when the exchange rate is weak and the British pound is depreciating, exports become more competitive and imports become comparatively more expensive, leading to a narrowing of the current account deficit.