How Brexit Will Affect the GBP

Ever since the second world war concluded, the aim of countries in Europe was to avoid any future conflict arising again between the nations. This has led to a consolidated effort at creating a common economic corridor which mutually benefits all. The first concrete step towards the emergence of a European Union was the setting up of the European Economic Community in the year 1957. This was the first time all the European nations decided to work together and create wealth for each other. The efforts soon expanded into other sectors, such as social and political, to what we know as the European Union at present times.

What Is Brexit?

The European Union is comprised of 27 member countries of Europe. Some of the prominent names among them include some very influential countries. This includes Germany, France, Poland, Italy, and Spain, among others. Britain was also a part of the European Union until the country chose to exit the union on 31st of January 2020. The decision was made after a public mandate which voted for an exit in majority. The months surrounding the decision brought about a lot of debate and speculation from experts and the general public alike.

This would mean that Britain or the United Kingdom would no longer be part of the common economic activity in the region. The deal is to be finalized as there are various conflicts that need to be settled before the nations can part ways. The European Union and UK are yet to finalize a few points of conflict such as:

• Who will be allowed to fish in the UK waters?

• EU worries that UK may prefer their own firms regarding the Brexit over European firms.

• The final details between the stakeholders are yet to be finalized.

What Brexit Would Mean for the Great British Pound?

This is the question many currency traders and trading institutes often contemplate. There is bound to be an impact upon the British pound post the finalization of Brexit. But how can a currency trader determine its impact?

Aftermath of Brexit Upon Sterling

The immediate effects of Brexit saw a sharp decline in the value of the Sterling, as opposed to the Euro and Dollar. This could be due to various reasons, such as high volatility of exports and imports. Further volatile movement is expected in Sterling as the details of the deal get finalized, which does not seem to be happening anytime soon. The prices have recovered over time, but the market is still unsure under the bleak details of the finalizing of the deal.

Currency Trading

This could be the right time for currency trading as the volatility is good for short-term investors. As the Sterling price goes down, more volumes of it are sold and as it goes up, the volume bought increases. From a currency trading perspective, the volatility regarding the Brexit and its impact upon the Sterling is expected to be there for a while. Long-term investors looking for currency trading must understand the volatile nature and buy when the prices hit low. As Britain exports look to increase post the pandemic, the Sterling is expected to recover as well.