Back in 2016, Brexit was voted on and became a reality for the British public. Since then, it’s been a rocky road for the pound, with ups and downs creating a spiky graph for the value. Over time, we’ve seen new highs and lows forming for this stalwart currency.
The initial effect of Brexit on the pound was a staggering loss. Almost overnight, the pound value plummeted much faster than anyone could have anticipated. A range of factors accelerated this, as it seemed the public no longer had faith in the market any more.
This started a freefall for the pound, which showed no sign of stopping. EXT Capital conducted a study into the value of the pound after each Prime Minister’s speech and found that the results directly correlated to the speech in question. The first Brexit speech allowed the pound to get a boost of 2%, which showed some confidence in Mrs May’s first talk.
When establishing the dates of Brexit in a speech on the 3rd of October, confidence in the pound dropped to an all-time low. Speculation was cast as to whether there was a solid plan for a successful Brexit, which lost more confidence in the currency. The Euro zone seemed to be unfazed by Brexit, which pushed the EUR up more when compared to the GBP.
Over the following years, Brexit has succeeded in destabilising the pound. The cost of Brexit has taken its tolls on a number of businesses and on the overall economy of the country. We’ve seen many businesses pull out of the UK entirely, as the costs of running in the country and the devalued currency make this a poorer business prospect for them.
There have been periods of time when the pound has surged back, but we’re still no closer to value of the pound prior to the major political event. Prior to Brexit in 2016, the pound was strong against the euro, but it hasn’t reached this same level since. There have been some spikes and highs for the currency since, though none have reached anywhere near the pre-Brexit value.
In the Future
The pound still has a long way to go to recover, with some being doubtful that this will ever happen. If the euro experiences issues in the future, then the pound may be able to gain some ground back on the currency. Political strife in America has also allowed the pound to up the stakes again, but this has not had as large or as lasting an effect on the currency.
The future of the pound is the subject of much speculation at the moment, though it’s hard to predict if or when it will return to a top value once more. When Brexit is complete and a full severance of the UK from the EU occurs, it’s anyone’s guess whether the pound will flourish or crumble. It’s volatile enough to make this an interesting trading prospect, though it’s hard to pin down which direction this will move.