After Britain’s shock vote to leave the European Union last week, the effects on the currency markets, and sterling in particular, have been profound.
The pound plunged to its lowest level in more than 3 decades, and you can see the sharp fall in GBP/EURO and GBP/EURO in the charts below, showing the movements in these currency pairs over the last 7 days.
GBP/EURO
GBP/USD
What next for sterling?
Some major bank analysts have predicted the currency would fall further in the months ahead, as financial investors price in the uncertainties unleashed by the Brexit vote and the scale of the damage to Britain’s economic prospects.
HSBC have cut its GBP/USD forecast to $1.20, and it’s GBP/EUR forecast to €1.08.
Other forecasts suggest that the euro could also weaken significantly due to the potential domino effect of other EU nations holding their own referendums, which creates huge uncertainty for the Eurozone.
It’s also likely that the Bank of England will cut interest rates later in the year, as they will have to do something to try and prop up an economy that had already slowed in the run in to Thursday’s vote.
Sponsored by Malaga Estates, part of JM Promotions.