The British Pound, The Euro And The Coming Months

Brexit will severely impact the British Pound and the Euro in the coming months, so we need to discuss it briefly.

As many of you who follow the The5ers blog know, we try to stick to financial issues as religiously as possible – we offer our analysis on a variety of topics, provide you with some success stories from the The5ers program, and even give you some interesting background on anything from trading tactics to various indices.

But as many of you know – economics does not exist in a vacuum and is often influenced by other conditions such as politics and world events. These next few months will be one of those times when it comes to the UK, the European Union, and everything related to Brexit.

The past week has seen some earthquake-like moves in British politics – Newly minted PM Boris Johnson suffered a significant defeat when several members of his party “defected” to the opposition to block his efforts of pulling off a “hard” (no-deal) Brexit come October 31st.

The situation was complicated further when parliament also blocked Johnson’s attempt to call for a flash election that will take place on October 15th, a mere two weeks before the Brexit deadline, at least for the time being.

Johnson’s opposition is attempting to give themselves and the UK three more months to negotiate a deal with the European Union by pushing the deadline to January.

As political struggles continue, this could devastate both the British Pound and the Euro in the coming months. Here’s a little about how this could impact you as Forex traders.

The British Pound currently sits at 1.11659 per Euro and has risen in recent weeks since hitting 1.07375 on August 10th. Still, it is becoming increasingly difficult to see it remain at these levels as the uncertainty surrounding it continues, with some experts saying that a “no-deal” hard Brexit will bring it to a 1-1 rate vs. the Euro and possibly worse.

There are many reasons for that, but we only have room for a few:

A “hard” Brexit will lead to increased border crossing times for an infinite number of products on both ends of the English Channel – anything from medicine to livestock will be faced with increased forms to fill out, shipping costs, not to mention border crossing queues are predicted to last as long as 2 days!

It is becoming increasingly unclear what the new standard for travel to/from the UK will be, so tourism and businesses will be negatively impacted.

And we can’t skip over the importance of proper relations between two such entities to the balance of power in the world economy.

With all of these conditions in a state of flux, it becomes easier to see why most predictions for the future of the British Pound are grim.

In the wake of years of Brexit stories and controversy, the UK has essentially backed itself into a corner – it can either proceed with its scheduled course of action, which will have untold impact on its economy for decades to come, or it can hope the EU has not exhausted its willingness to discuss more reasonable terms (or a complete U-turn) and risk upsetting those who voted for Brexit, not to mention come off looking like a nation that has no idea what it is doing on a global scale.

Obviously – neither course of action is very desirable, which means that both the British Pound and the Euro are predicted to have a stormy few months, which can play right into the hands of the wise Forex trader.

The following link has a small chart of the EUR/GBP, which shows just how August ended for the EUR/GBP pair, which could also indicate the future.

The question now remains – How do you see this Brexit debacle going? Will you trade this pairing or stay away from it in the coming months?

Let us know!