Question

Within the uk, analyse how the a FX market of your choice has been impacted by a recent political event of your choice. Include charts to illustrate your analysis.
Your answer should include a brief outline of the political event at the start of your answer. (750 words minimum) Thanks

Answer 1

Forex is a real global marketplace, with buyers and sellers from all corners of the globe participating in trillions of dollars of trades each day. The fact that foreign exchange trading has become such a global activity means that macroeconomic events everywhere play a greater role in forex than ever before. Traders don't have to stick to popular currencies anymore, but they are a good place to start. Below, we'll discuss some economic trends and events that will help those who are new to the market to become successful forex traders. The forex market is primarily driven by overarching macroeconomic factors. These factors influence a trader's decisions and ultimately determine the value of a currency at any given point in time. The economic health of a nation's economy is a primary factor in the exchange rate of its currency. Overall economic health can change quickly based on current events and new information. However, most of the best forex traders are highly disciplined and stick to a set of trading rules. Let's take a closer look at some of the factors that influence an economy's standing and drive changes in the value of its currency. If inflation in the UK is relatively lower than elsewhere, then UK exports will become more competitive, and there will be an increase in demand for Pound Sterling to buy UK goods. Also, foreign goods will be less competitive and so UK citizens will buy fewer imports.
Therefore countries with lower inflation rates tend to see an appreciation in the value of their currency. For example, the long-term appreciation in the German D-Mark in the post-war period was related to the relatively lower inflation rate.Changes in a country’s interest rates also affect its currency, through its impact on the demand and supply of financial assets in the UK and abroad. For example, higher interest rates relative to other countries, makes the UK attractive the investors, and leads to an increase in the demand for the UK’s financial assets, and an increase in the demand for Sterling.
Conversely, lower interest rates in one country relative to other countries leads to an increase in supply, as speculators sell a currency in order to buy currencies associated with rising interest rates. These speculative flows are called hot money, and have an important short-term effect on exchange rates.In this entry we analyze available data and research on international trade patterns, including the determinants and consequences of globalization over the last couple of decades. Here is an overview of the main points we cover below.
Over the last two centuries trade has grown remarkably, completely transforming the global economy. Today about one fourth of total global production is exported. Understanding this transformative process is important because trade has generated gains, but it has also had important distributional consequences.
From a historical perspective, there have been two waves of globalization. The first wave started in the 19th century, and came to an end with the beginning of the First World War. The second wave started after the Second World War, and is still continuing.All three of these components of globalization might have contributed to obesity in low and middle income countries, and because they capture different dimensions and as will be shown further below are at best imperfectly correlated with each other, it is important to examine the influence of each sub-dimension separately. Taken together, globalization may be contributing to obesity by stimulating increased calorie consumption, and/or smaller energy expenditure. While there exists a considerable literature which considers the role of technological change in affecting energy expenditure and consumption. If we assume the UK and France both produce goods that the other wants, they will wish to trade with each other. However, French producers require payment in Euros and the British producers require payments in pounds Sterling. Both need payment in their own local currency so that they can pay their own production costs in their local currency. The foreign exchange market enables both French and British producers to exchange currencies so that trades can take place.The market will create an equilibrium exchange rate for each currency, which will exist where demand and supply of currencies equates.The political factors affecting business are often given a lot of importance. Several aspects of government policy can affect business. All firms must follow the law. Managers must find how upcoming legislations can affect their activities.The political environment can impact business organizations in many ways. It could add a risk factor and lead to a major loss. You should understand that the political factors have the power to change results. It can also affect government policies at local to federal level. Companies should be ready to deal with the local and international outcomes of politics.