After the u.s. dollar, the euro and the japanese yen, the pound sterling is the fourth best currency to trading on the foreign exchange market. It is found in approximately 12% of exchanges. What are the factors that are changing the course of the british currency ? This is what we see in this article.
A book sensitive to the level of risk aversion
The british pound is walking with the world economy. When the latter goes well or is showing signs of recovery, the pound appreciates on the forex. On the other hand when times are more difficult, the british currency tends to depreciate. You guessed it, the book is not, therefore, a safe-haven currency. Because of this, it is popular in a period of strong risk appetite.
A book heavily influenced by the economy of Great Britain
Among the developed countries, the United Kingdom was the economic growth is the most volatile. In fact, since 2008, its GDP collapsed by 4.9% and then it has registered a slow recovery and hard before greatly accelerate thereafter. On the foreign exchange market, the book follows these developments, when growth is present it is appreciated when the country is going through periods of recession it depreciates.
You will have understood, the pound sterling is dependent on the perception of the level of risk in the markets. If risk aversion is strong, the currency depreciates, if the risk aversion is low, the pound appreciates. It is also sensitive to the economic cycles of the country. To trade pairs including the pound, are interested in you, therefore, to the economic fundamentals.