The referendum on the UK leaving the European Union which took place on June 23, 2016, immediately affected the Forex market. After the Referendum, GBR/USD pair fell from 1.5000 to 1.3200. The country is expected to leave the EU on March 29, 2019.
The UK economy is one of the most developed in the European Union. After leaving the EU, the UK is going to establish new trade relations. But this stage is usually characterized by uncertainty and volatility. Investors were afraid to invest money and were waiting for the improvement of the investment climate.
Negative processes and GBP decline continued during the exit procedure, but as soon as the UK establishes new economic relations, it will enter a new stage of growth.
Trading and Perspective Financial Instruments around Brexit News
The transfer of investments from European to American currency was the most widespread scenario after Brexit news. The US dollar showed an increase against major currency pairs. Another financial asset that grew against the events was gold. The metal showed a growth based on the results of the Referendum. It remained a reserve haven for investors in 2018 and 2019. According to technical analysis, gold is also in an uptrend, and traders can open long positions based on long-term prospects.
Forex traders should pay attention to the following facts:
- Increase of trade transaction costs.
- Weakening of GBP.
- Escalation of inflation levels.
- Reduction of interest rates by the Bank of England.
On the basis of the analysis of October, 2018, traders could see that the market sees the UK-EU deal as bullish for the British pound. A scenario without deals seems to be bearish for the British pound. Therefore, traders can begin to make a list of instruments for trading if the British pound rises or falls in response to the news. Moving averages is a quick way to determine if a currency pair is strengthening or weakening.
Latest Analytics of 2019
GBP traded near the nine-day high of last week at 1.3380 USD, receiving support from Brexit’s likely prevention without a deal. The latest quotes were 1.3292 USD.
It remains unclear whether British Prime Minister Theresa May can receive parliamentary support for her Brexit deal which has already been rejected twice in the vote. May has only three days to get approval for the exit from the European Union. She warns Brexit supporters that if they accept her deal, Britain’s exit from the EU will be delayed, and the country can take part in the parliamentary elections of the bloc.