Question

what is the impact on Brexit UK currency market

Answer 1

The United Kingdom’s vote to leave the European Union in June 2016 had a significant impact on currency markets.
The pound has been consistently on the decline since the results of the referendum became clear on 23 June 2016. An initial sharp drop has been followed by several slumps and a persistent overall decline. This leaves the pound sterling to euro exchange rate 15% lower than pre-referendum levels. The pound declined immediately against the US dollar and the Australian dollar, with rates plunging by 17% after the vote. This means that people wanting to exchange pounds into other currencies are getting significantly less. Anyone buying pounds will find the current exchange rates particularly lucrative.
Tumbles left the pound as the worst-performing currency during the first half of 2016.
It is impossible to predict exactly how, when, or even if, pound sterling will recover from the Brexit currency impacts. There are some key things to key an eye out for, however.

Firstly, monetary stimulus weakens a currency. If it seems like the Bank of England is not going to cut interest rates further or pump more money into the economy, that will be seen as a sign of confidence. In such a case, the pound would likely rise.

There could be strong upward movement for sterling if it seems that the United Kingdom will get a favorable trade deal with the European Union. EU politicians suggesting that they are willing to negotiate single-market access without freedom of movement would drastically boost investor confidence.

Recent political events have shocked the markets to such an extent that they are largely ignoring key economic reports. However, British data will at some point begin to have an impact on currency movement. If the United Kingdom is in a strong position going into Brexit, the pound could jump. This could happen if companies continue to hire and invest in Britain instead of relocating overseas

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