Market participants and investors have no illusions about the British currency. Recently, many analysts have called the pound a hero of political drama. They agree on a further decline in the fog of Albion.
The British pound has become hostage to the political situation in the country. Its high volatility is largely due to instability relative to the upcoming Brexit. Serious passions are boiling around Britain's exit from the European Union. On Thursday, September 5, members of parliament tried to thwart Prime Minister Boris Johnson's decision to leave the Euroblock without a deal. The representative of the Conservative Party and Prime Minister's brother Joe Johnson left the party ranks.
The result of these events was a sharp increase in the pound. On Thursday evening, the British currency peaked at $ 1.2346. Analysts predict her 6% rise in the process of agreeing on a Brexit deal. According to Daniel Trum, currency strategist at UBS Wealth Management, the pound may show significant growth if Brexit is postponed until January 2020.
Many investors and traders remain cautious about the prospects for the British currency. They are concerned about excessive volatility due to political uncertainty in the country. Experts compare the British pound with the Mexican peso, which has similar problems. Some analysts ironically call the pound "British peso." They emphasize that the hidden volatility of the Foggy Albion currency, expected in the next two months, was higher for the pound than for the peso. At the same time, strong intraday fluctuations of the British currency became more frequent, indicating the growing problems associated with the country's exit from the EU.
Experts draw attention to the excessive activity of the "swing" of the pound when intraday fluctuations reached 1.2% for two consecutive trading sessions. This is an extremely alarming indicator, analysts say. In the price of the British currency, markets place a high risk of powerful price fluctuations in the near future. Note that over the past five years, the latent pound volatility has exceeded the volatility of the Mexican peso three times, and the active growth of the "British" has always been due to Brexit.
Investors' desire to abandon the pound due to growing political problems led to a reduction in liquidity and exacerbated currency fluctuations. According to the calculations of Nick Sguropoulos, a currency expert at Barclays, at the moment the market price includes a 40% probability of Britain leaving the EU without a deal. For the pound, this means the prevalence of bad news over good. The analyst is confident that without a deal Brexit will bring down the British currency to $1.09. Experts of the largest bank Nomura agree with him. If the UK does not agree to the deal, they predict a strong decline to $1.01 and pound drop - almost to parity with the US dollar.
Currently, the currency of Misty Albion is in the range from 1.2316 to 1.2323. The GB /USD pair is trading in a narrow range of consolidation at the top of the growth wave. At the same time, analysts do not exclude the appearance of the first impulse to decrease to 1.22.
In general, the situation with the pound is seen by experts as not too rosy, but not without certain prospects. Only they, unfortunately, remain vague for the British currency.
