Exchange Rate Forecast for GBP Post-Brexit

 

It should come as no surprise that recent developments in British politics have proven to be a catalyst for significant fluctuations across a wide array of financial markets. The GBP has proven itself to be particularly sensitive to a post-Brexit reality, with a dramatic free fall in cur-rency value occurring as the vote began to swing towards a Brexit victory. Now that the vote has passed and lawmakers have vowed to heed the will of the people on this issue, the next step for the British government is to trigger the much-discussed Article 50, which will kick off a two-year process of formal negotiation before the UK is no longer an EU member. Precise-ly when Article 50 will be executed however, is unknown, and this is uncertainty is keeping the GBP in rather tepid water as investors remain hesitant as to whether or not a re-investing is in their best interest. Although currency exchange software is not, in itself, a source of knowledge or advice, the charts for recent GBP activity found in these programs will provide no short supply of drama and suspense.

This is not to say, however, that the GBP has not regained some its value since hitting a mul-ti-decade low the day after the vote was completed. In fact, it could be viewed as some form of optimism that the GBP was able to weather as well as it did not only the Brexit results, but also the sudden resignation of David Cameron, a credit downgrade, and bitter infighting amongst members of Parliament. With this in mind, it seems reasonable to assume that, alt-hough progress may be slow, the GBP will continue to regain value as the world comes to grips with the new face of the EU and a starkly independent Britain.

In the more immediate future, many fx investors are waiting to see if the Bank of England opts to pursue a rate cut as a means to encourage business growth and investment in this critical time. Monetary policy easing is definitely one method by which supports can be erected to prop up the GBP and ensure that future declines will be limited in scope. At the moment, the GBP is hovering comfortably at 1.32 GBP / USD. Although many professionals are somewhat bearish regarding future price movements, it is widely acknowledged that the Bank of England pending announcements will significantly influence both short and long-term pricing. Those with currency exchange software are advised to watch the GBP closely in the upcoming weeks.

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Isuru Karavita

He graduated from the university of Hertfordshire with a BEng(Hons) in Digital Communication and Electronic Engineering. 

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