Forex: The British pound falls again, expectations for a future improvement in the statistics seem somewhat unrealistic at this point.
News of currency trends continues to emerge this week, and this time the affected currency is the British currency.
The pound sterling falls 0.8% against the dollar on Friday, hitting its lowest level in almost a month, with questions about whether the United Kingdom will seal a trade pact with the European Union. These actions will be what causes a greater weight of the currency during the season.
The first half of 2020 has been full of unimaginable scenarios for the global economy. The coronavirus crisis has largely plagued every item in global economies. Affecting the currency market equally.
However, on this path that the United Kingdom has taken on its own, the health crisis has been just one more stumbling block for the British pound market. Since Brexit (the United Kingdom’s exit from the European Union), this currency, highly competitive in the past, has fallen.
British Pound Falls: Has Brexit Been To Blame?
The factors causing the fall in the price of the pound sterling began more than a year ago.
Its first critical hit was in 2016, and since that referendum on the European Union, the pound had several ups and downs. There was also another critical drop in 2019, when the first Brexit applications were approved.
These reasons encouraged that, from the outset, the UK scenario was one of economic slowdown before the Covid-19 crisis.
The currency of the English country has served during this period of transition, as a temperature gauge, to test the opinions of citizens and companies.
Investors, business owners, and currency users fell back. Affected by the uncertainty caused by the decisions of the Prime Minister of the United Kingdom, Boris Jhonson. Thus causing the steady fall of the pound sterling.
Given the clear negative results that Jhonson generated with his actions in the price of the pound, he maintained that “the government does not comment on the changes in the currency.”
In addition to this, the dollar continues to be an arduous competitor of currencies in the Forex Market, displacing other currencies in this global crisis.
An uphill climb
We have seen how the British economy struggled to stabilize after an aggressive economic depression, in search of its economic dependence.
The coronavirus has also played its part in hindering the desired stabilization of the British economy. Allowing the pound sterling to fall short of its past ratings, further losses to the UK’s record economic slump.
Although the British economy is gradually reopening after the forced blockade of the coronavirus worldwide. Analysts do not change their mind, and claim that Brexit will continue to be the single most important factor affecting the pound. Even four years after the country voted to leave the European Union.
British analysts had their expectations on the economic interconnections between the United Kingdom and the European Union. These agreements would begin to be discussed in mid-March. Ensuring that both regions could maintain the previous economic treaties, free passage between borders and free tariff agreements.
This decision promised stability for the British currency, but little progress has actually been made in agreeing on the UK’s future trade relationship with the European Union bloc.
In that context, ING chief strategist in EMEA Petr Krpata said he expects the pound to drop further during the summer, hitting 92.00 against the euro.
A hot picture
On the other hand, some consider that the weakness of the pound could give loose to European companies, and see this fall in price as a cheap advantage to invest in the British country.
However, the tariff costs of importing manufacturing materials, of certain products and uncertainty. Added by the new agreement for commercial exchanges. They influence investor decision-making by doubting profitability.
Recall that, although there is already a separation agreement (signed last January), the country is still in the process of transition, since the actual departure date will be January 1, 2021, generating even more doubts regarding the future. of the pound sterling.
It is a process that is still in the air and that creates economic uncertainty. Since, many details of the agreement with Europe remain to be defined. The results are expressed in the Forex Market, with the pound falling below 1.24 this Friday.
Projections in the Forex Market
The pound was down 0.6% on the day against the euro at 2:50 pm GMT at 90.87 pence, its lowest level against the European currency since March 26. Against the dollar, it fell 0.8% on the day to $ 1.2325.
The British pound showed one of the worst monthly results among the major currencies in June, lagging behind in the overall market.
Investors have been cautious based on English fear of the second wave of coronavirus infections expected in the UK. Well, Boris Jhonson announced on Thursday significant flexibility to measures of social isolation in England. He announced that bars, restaurants and pubs will be able to restart their services from July 4.
These actions force entrepreneurs to probe the future of the English currency in the market.
At the time of writing, the British Pound / Dollar is trading at 1.2336 on the Forex Market, with the British currency falling in recent hours.
Can the pound sterling regain its golden age?