Effects of Market Fluctuations on the Pound Sterlings’ Value

Moneymagpie Team 4th Sep 2024 No Comments

Reading Time: 4 minutes

The year 2024 has been exciting for the global currency market. The Great Britain pound survived the 2024 United Kingdom election almost unscathed. This article examines how Sterling traders can maximise the value they get from their investments while minimising risk as we approach the 2024 USA general elections. Are you ready to learn? Let’s get into it.

The Current Value of the Pound
Economic Factors Influencing Pound Fluctuations
Political Events Impact on the Sterling
How the Pound Influences Trading Strategies
Risk Management in the Forex Market
GBP Outlook for the Rest of 2024
What’s Next in GBP Trading?

The Current Value of the Pound

The pound has traditionally been the most “valuable” of the big four currencies. The US dollar, Euro, Japanese yen, and pound are among the most traded and essential global currencies. During the build-up to 2024’s UK election, investors turned to forex trading as a way to minimise risk if the currency performed unexpectedly. A new government was elected in the country, but things remained steady for the most part, and some analysts expect the Sterling to maintain its “safe” performance throughout the year. At the time of writing, 1 GBP is worth 1.32 USD and 1.18 EUR. GBP-USD traded at 1.22 in September 2023, showing incredible growth and investor confidence over the past few months.

Economic Factors Influencing Pound Fluctuations

As a trader, it’s best to understand what influences the different currencies you trade so you can be better informed and prepared for potential shifts. Understanding when the Bank of England plans to announce new rates can be the difference between making a profit or losing unimaginable sums.

Over the years, factors like interest rates, inflation, market sentiment, and political instability have influenced the performances of currencies, including Pounds. Geopolitical turmoil, such as the ongoing war in Ukraine and wars in the Middle East, also pose a significant effect. Growth figures play a massive role in deciding whether this currency will grow or dip in the next few months.

In addition, the decisions on interest rate cuts will be a major determinant of the Pound’s performance for the rest of this year. The Bank of England has taken its own step following announcements by the Monetary Policy Committee’s (MPC) decision to reduce interest rates from 5.25% to 5.0%. Typically, the demand in the forex market is expected to increase with a decrease in interest rates and lower inflation. Keep an eye out for economic indices and activities of the Bank of England. You won’t regret doing the extra research.

Political Events Impact on the Sterling

There’s a major ongoing war in Europe for the first time since the “Balkan Troubles.” Ukraine and Russia are at war, and the fallout has had significant ramifications on energy prices and growth prospects globally. Geopolitics cannot be ignored as a forex trader, and 2024 is another “exciting” year for us all. There are myriad conflicts and tragedies happening as we speak, and these significantly impact the global economic landscape.

Global conflicts and tensions are affecting various regions. Sudan and Ethiopia are embroiled in internal strife, while hostilities between Israel and Palestine have reignited. In South America, Venezuela is escalating tensions with Guyana over oil resources. Despite efforts to insulate global currencies from geopolitical events, these conflicts still have the potential to impact financial markets worldwide.

How the Pound Influences Trading Strategies

Forex traders are familiar with the Sterling and its influence in the market. GBP is one of the most traded currencies in the world, with USD-GBP and EUR-GBP being the most traded GBP pairs. It’s safe to say that these three currencies are interconnected and co-dependent. The GBP is worth slightly more than the others and serves as a final “frontier” for the global financial market. When the Bank of England’s Governor addresses official letters to the Chancellor of the Exchequer, the entire financial ecosystem pays attention.

Risk Management in the Forex Market

Forex trading often distinguishes between two categories: successful traders and those who take excessive risks. While some believe these are mutually exclusive, experience shows that disciplined approaches and robust risk management strategies typically characterise long-term success in forex trading.

A great first step to managing risk is choosing a reliable and reputable forex trading service like OANDA. You will find almost all the tools needed to ensure your success while minimising exposure as a successful UK-based trader in 2024. Patience is definitely a virtue in this industry, and it’s recommended that you take things step-by-step as a forex trader.

GBP Outlook for the Rest of 2024

The year 2024 started with potential and cautious optimism for traders. Bitcoin led the cryptocurrency market to new heights in March before faltering in July and August. The Sterling successfully mitigated fears surrounding the UK’s General Elections. Industry insiders and investors cautiously look towards the GBP as a short-term alternative to the USD during the 2024 USA election cycle. Personal research is essential, but investing in the GBP looks like a solid decision for the rest of the year.

What’s Next in GBP Trading?

The UK has silently become a powerhouse for retail forex trading, but the fact that you live here doesn’t mean that you should not consider other currency pairs. Look beyond Europe, and you might find valuable currency pairs that can change your life and make you a forex trading legend. You never know; 2024 might be the year to make it big as a forex trader.

Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.

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