Forex Trading: British Pound (GBP) in 2022

The UK might be a small landmass, but it’s the world’s sixth-largest economy, and spectators have watched the British Pound with interest for a while now.

A Close Look at the British Pound

The British Pound is the world’s oldest currency that’s still in use. It’s also one of the strongest currencies, ranking above both the Euro and the US Dollar.

Unsurprisingly, this makes it a popular currency among traders — it’s the fourth most traded currency in the world, making up around 6.4% of trades in total.

GBP Trends: A Look at Recent History

To begin with, Brexit was a big topic. After the public voted to leave the EU, the value of GBP with respect to EUR plummeted. It hasn’t recovered since — GBP/EUR was about 1.4 in late 2015, but the two currencies are now close to parity.

A similar trend has taken place with the USD/GBP rate, although the drop has been less marked (from around GBP/EUR 1.5 in 2015 to around 1.3 now).

How the COVID-19 Pandemic Affected the British Pound

The FTSE 100 Index (the nation’s major stock exchange) and the country’s GDP both took a huge hit in April, and they haven’t recovered since. As a result, the sterling fell sharply against the dollar in this period — in mid-March, the GBP/USD rate went from around 1.3 to around 1.15 in a matter of days.

GBP Rates: Impact on Businesses and the Economy as a Whole

When the UK economy is at risk of becoming inflationary, the central bank raises interest rates to make the UK’s returns seem more attractive to foreign investors. This encourages pension funds to sell USD and to buy GBP, making the GBP relatively more valuable.

What Does the Future Hold for the British Cable Pound (GBP)?

It would be a stretch of the imagination to come up with an optimistic, upbeat prediction for the future of the British Cable Pound. Unless the fortunes of the UK and its currency drastically change, it seems to be heading for greater volatility or a weaker currency — and probably both.

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