The current political instability in the UK is highly influencing the stability of the British Pound and its value in the international markets. While the sterling was one of the top performers in the realm of currencies in the beginning of 2018, sadly – and if you are following currency news on a daily basis, you may have probably noticed – the continuous Brexit-related unrests have lead to a yo-yo effect on the currency’s value for the rest of the year and into 2019.
Furthermore, the uncertainty among MPs about the future of Britain’s withdrawal agreement from the EU – in addition to the unending political commotion in parliament – have all contributed to the current volatility of the pound, which can be observed daily at https://www.currency-convertor.uk/exchange-rate-euro-to-pound. And because the currency’s fate is now tied to a number of changeable political scenarios, this article will shed some light on the pound’s forecasting in the coming period.
While Theresa May faces mountains of work aiming at garnering support for her withdrawal agreement, the lack of clarity and mounting tensions within the Conservative party loom over the value of the pound, as it remains generally uncertain. That being said, the next few months will be extremely crucial, as much of the pound’s future will depend on what will happen politically; how it will impact the standard of living in the UK; and how investors will react.
How the Pound Will Be Affected
Predicting exactly what will happen to the sterling as Brexit nears is almost impossible, for it’s important to remember the other aspects that will impact the currency’s value. For instance – and on the top of the list of factors – is inflation or the cost of living, which held steady at 2.4% in October (according to the Consumer Price Index). When inflation rates drop, it eases the pressure on the Bank of England to raise interest rates. And since foreign investors refrain from pumping money into the UK when interest rates are low, the pound’s relative value may subsequently drop.
Over the coming months, and with more clarity over any Brexit deal, the pound’s value may actually rise in the near future. However, this is just a theory; meaning that if you are making foreign-currency transfers in the next few years, you will have to be prepared for sterling volatility. Being ready with a disaster management plan for your investments is the best thing you can do at the moment.
The Future Holds Interesting Times
Just like all political changes, the UK is going through a lot of variable unforeseen challenges due to the Brexit process, and the sterling is suffering as a result. Occasional yo-yo effects and fluctuations are foreseen in the coming months. And while the nature of the Brexit deal, as well as the inflation rates and other factors involved will have a major impact on the local currency and foreign investments, you can be prepared with some solid financial plans and risk management strategies to minimize any losses and make the best out of your international money transfers.