Forex: Sterling under pressure is not new to analysts. Will this continue to affect your ratings in the Forex market, and will it become a profitable currency in the future?
The UK has been responsible for weakening its own currency, in pursuit of its independence. At this point, economists from the European Union bloc fear that the British pound may no longer be able to keep up with the pressure.
The UK economy has been suffering multiple blows for a long time. Since the Bitcoin Rush decided to go its own way, without being part of the EU bloc, in 2016, it has been uphill for its economy and currency to recover.
Analysts of the UK’s exit from the European Union believe that the biggest stumbling block to the UK’s desired economic advancement has been Brexit. Even in the face of this coronavirus health crisis, Brexit continues to wreak more dramatic havoc on the British than the pandemic.
The continued failure of the British Pound
The British currency declined against a dollar that has been holding steady in high positions on Tuesday. This occurred as market investors waited for confirmation of the government’s spending plans to boost the British economy. Which, in fact, recorded its biggest contraction in 40 years in early 2020.
Following the economic shutdown that the UK faced due to the pandemic, reopening the economy has been uphill. Already the British nation was facing a deep recession because of the cessation of interconnection with the EU. But, this did not stop the UK from aiming for an upturn in its economy as in the past.
Thus, the UK government made the decision to maintain certain trade connections and low tariff control agreements with the European Union. These agreements were to start being discussed in mid-March, but the meetings were postponed due to the crisis situation.
However, investor insecurities remain. These are reflected in the Forex market, despite promises of trade agreements and an injection of money into the British economy.
The British pound under pressure exists because of fears that the UK will not be able to close a trade deal with the European Union before the end of the 2020 deadline. Tuesday is the last day that an extension to the transition period can be requested, but the EU has refused to do so.
An increasingly weak currency
The weakness of the Libra that we have been witnessing seems to promise to stay. This is a trend that has been going on for some time. Therefore, analysts in favour of the European Union bloc say that this weakness will increase for the United Kingdom.
„The pound is on track to become the worst performing currency this month for the second month in a row.
Lee Hardman, currency strategist at MUFG in London
The pound was hovering around the month’s lowest ratings. Dropping 0.15% to $1,226 at 08:30 GMT, it remained above the three-month lows against the EUR at 91.34 pence. However, the currency has fallen more than 7% so far this year against the dollar, according to Reuters figures.
In the Forex market, it is expected that the indices will continue to be negative. The British Pound is also expected to remain under pressure, due to the uncertainty this currency has generated since the Brexit.
Furthermore, the future outlook that is coming, after Prime Minister Boris Johnson will announce a plan that promises to accelerate infrastructure investment of 5 billion pounds ($6.13 billion), has only generated more concern among investors.
The future of the British currency remains uncertain. More so now that the peak of coronavirus infections began to rise in the last week, after some small towns in England opened their commercial premises.