Monday, May 20, 2024

What would the GBP do in the forex markets as a result of Brexit and the current pandemic?

You can’t beat a time of instability and volatility from the standpoint of a forex investor. As a result, the transition from 2020 to the new year has been an ideal time to speculate and accumulate GBP, a currency that has been hit by both the Brexit vote and the coronavirus pandemic at the same time.

Boris Johnson managed to reach an agreement with European Union negotiators, averting a total disaster – a no-deal situation would have sent shockwaves across the economy. Despite this, the Pound Sterling has plummeted from 1.20 to 1.12 versus the Euro in less than a year. Is now a good time to start dealing for or against the pound? It goes without mentioning that there is money to be made selling Pound Sterling right now if you use the best forex account management services.

Not Clear Future

At the time of writing this article, even though the UK was having one of the most frequent causes of the covid patients, the pace of the vaccination is going remarkably fast. Even though the restrictions were in force only until February, it was believed to have an impact on the economy way longer.  Naturally, this will have an impact on GBP, particularly when compared to currencies like AUD, CAD, and others, which are benefiting from the fact that their respective countries are starting to catch up with the pandemic.

But, for the time being, things seem to be going in the right direction for the UK, with a seemingly comprehensive vaccine campaign paired with increased government financial assistance for those who are unable to function. A jolt to the economy is inevitable if any constraints are relaxed in time for spring.

There are also known unknowns beyond that. What kind of trading agreements will the UK pursue after it leaves the EU? Turkey is one of these trading partners, and the UK’s strong relations with the United States and parts of Asia will be preserved. Will this, however, provide the requisite stimulus to re-establish confidence in the British economy?

American Factor

Donald Trump is due to leave the White House, and his replacement, Joe Biden, will be in charge of overseeing economic growth in the United States. They’ll be tied to rising inflation and a more stable diplomatic posture with China and other countries that have recently become America’s adversaries.

However, the consequences of the coronavirus pandemic on a nation of 328 million people are serious, and the American economy can take a long time to recover to pre-COVID levels. With travel bans in place for the majority of the year, tourism will be scarce for most of the year, leaving dependent states like Florida and New York without their normal steady stream of revenue. This would naturally drag the GBP/USD, so looking for other currency pairs in Forex market that seem to be recovering faster – such as GBP/AUD or GBP/CHF – could be a better bet right now. It is notable to take the US market conditions into account as after leaving the EU deal, for the UK, the US stays the main economic partner and they affect their national currencies a lot since it has the spillover effect.

European Disagreement

Because of the structure of the European Union and the diverse countries that make up its membership, there is a significant disparity of how each country is faring in the aftermath of the pandemic. The irony is that the Euro is suffering post-Brexit, despite the fact that financial support within the EU is slow to move on, with many analysts expecting GBP to rebound at a faster pace than EUR. If this is the case, savvy traders will close any EUR positions they have in favor of the GBP, which will help to create confidence in the currency and encourage traders to invest in it.

Summing It Up

Finally, to sum up, the year 2020 has been tough for many countries but the UK was facing two major obstacles, In addition to a global pandemic, they had to deal with the Brexit deal. Some specialists were predicting that the outcome would have been too harsh for the British economy, that the country could not cope with two major changes and strikes, however, it did not appear to be the final result.

As we see at the time of writing this article, the UK is one of the first countries to open up after covid restrictions due to the rapid pace of the vaccination of the population, which also means that the economy is starting working again. Appeared, that GBP was stronger to cope with those obstacles than many other national currencies, and for those who are involved in the forex market, it makes the best opportunity for them to purchase it, as it guarantees better profit as of today.

Sam Allcock
Sam Allcock
Sam heads up Cheshire-based PR Fire, an online platform that has already helped over 10,000 businesses to grab widespread media coverage on their news at an extremely accessible price point.

Recent Articles

Related Stories

sakarya escort bayan Eskişehir escort bayan