The United Kingdom has been on movie-like drama for the past nine months. The country’s decision to leave the European Union last June turned out to be the plot twist of its story and the actors in this scene have varying reactions. The stock market surprisingly responded positively with the referendum, with the FTSE 100 logging winning streaks after winning streaks. The UK economy, which was expected to dive, also awed the world as it shrugged off Brexit aftermath. If there is one biggest loser in this litigious vote, it is the country’s currency as the GBP index is on a dying phase of long-time downward trend.
GBP Index is Falling Down
This time, it’s not only the London Bridge that has fallen down but also the Great Britain pound. Hours after the vote, the GBP index plunged into a settlement not seen in twenty years as it plunged a whopping 10% to settle at 1.33 versus the dollar. The pound was at 1.50 before the June 23 ballot and was enjoying a relatively calm first half.
Months after the UK’s decision to leave the continental bloc, the GBP index was still devastatingly hit. It was the exchange rate that was greatly shook by the vote as investors’ confidence for the sterling quickly dissipated. In the final quarter, the British pound was down 12% and 15% versus the euro and the US dollar respectively.
So can the GBP index recover? Or it will continue tracking the negative territory?
There are still numerous factors to be considered. Prime minster Theresa May will trigger the formal Brexit process under Article 50 next month. There is an ongoing political upheaval in various parts of Europe. President Donald Trump continues to awestruck markets. These could be a boon or a bane for the pound, depending on how the markets would respond.
Brexit has spelled doom for the fate of the British pound. What event now could help the currency return its gloom?