Each year brings a new forecast for the global currency markets. This year looming political elections, released budget plans, and monetary policy will all act as powerful forces in shaping the valuation of global currencies.
In 2019, the global currency market is plagued by a mixed bag of unexpected and expected factors that will fuel currency volatility. A looming Brexit deadline, an Italian budget crisis, and decision by German prime minister, Angela Merkel’s to not seek re-election will all affect the Euro and GBP. Similarly, the U.S. faces many upcoming events that will challenge the success the USD saw in 2018. The increasing traction experienced in the cryptocurrency market, as major financial powerhouses, such as Goldman Sachs, begin to find ways to adopt a crypto dollar will also be a big player in 2019 for affecting price movements.
The theme of forex in 2019 is uncertainty. Organizations, market makers, and companies must prepare for the unexpected volatile movements in currency valuations. Investors should look for trusted brokers; a comprehensive list of forex brokers can be found on the FX-List. Here are some geopolitical and economic events that will shape the currency market in 2019.
Brexit: What an Exit from the European Union Means for the UK
Brexit, the UK’s exit plan to leave the European Deadline is quickly approaching with a deadline of April 12th. As the surrounding countries of Europe are the UK’s largest export market, the exit could hold potential negative effects for the GBP. Many London based companies have threatened to leave the UK if Brexit goes through. With no approved plan of exit, the GBP is expected to continually fall against its USD and EUR counterparts; however, if the Brexit plan is reversed uncertainty could diminish causing a spike in value.
How the Italian Budget Crisis and Step down of Angela Merkel Will Affect the Euro
In November of 2018, the EU rejected Italy’s budget plan for the 2019 fiscal year. The plan had proposed a 2.4% deficit in GDP, which was greatly above previously agreed deficit targets. The increase in deficit comes as a result of plans proposed to address income for Italy’s poorer socioeconomic sector and efforts to reduce income tax. While the plans are targeting important social issues they have an extremely costly budget. The EU worries that the countries existing large deficit would drastically increase and spark an economic crisis similar to the economic crisis caused by Greece in 2010. This divide in the EU will most likely fuel volatility in the Euro.
Angela Merkel, the prime minister of Germany announced that she will not run for re-election in the coming term. Her announcement fueled uncertainty that caused the Euro to drop against the USD. Merkel’s decision comes at an uncertain time in the EU; the Brexit deadline and the Italian budget have created an atmosphere of uncertainty. As Germany is one of the most prominent forces in the EU, the Euro will most likely experience volatile changes in valuation.
The Trade War Between the U.S. and China: How This Will Affect the USD
The trade war between the U.S. and China has the potential to disrupt supply chains. U.S. companies that have traditionally relied on Chinese imports for operation are now incentivized to find a U.S. source for those imports. The creation of more U.S. jobs and imports combined with China’s loss in trade could fuel an increase of value in the USD.
In 2019, The forex market is likely to experience volatile movement in major currencies values. Geopolitical and economic uncertainty is on the horizon for many major nations; the uncertainty of political leaders, budgets, and monetary policy will most likely be matched with associated fluctuations in currency value. In the world of forex investing, it is important to prepare for unexpected events and work with trusted brokers.