Concern over the British Pound currency remains.
This article is originally referred from FXNet Market News.
Less than three weeks after the BREXIT, which shook global markets, especially the British Pound (GBP), the local currency has found its footing reaching its highest level in 2016.
The recovery happened as Theresa May became the main candidate to replace David Cameron as Prime Minister of the UK, this expectation has wiped out the sterling’s reaction to the June 23rd vote for the UK to exit the European Union (EU).
The Brexit’s effect radiated across all major currencies including the US dollar (USD) which has been at risk of losing value due to global economic slowdowns throughout the year.
Cleveland Fed President Loretta Mester insisted in her Speech in Sydney that the effects of the Brexit cannot yet be determined and that the USD’s movements are more dependent on local data.
“Payroll growth slowed considerably in May, raising the question of whether we were at the start of a reversal from the considerable progress that’s been made in labour markets, or whether the weak reading was the type of transitory change we typically see during expansions”, Mester said.
Despite the recent and perhaps temporary gain, GBP has lost 11 percent on a trade weighted basis since the vote results, and 15 percent against the USD, which puts it well on track to fall as steeply as it did following 1992’s infamous Black Wednesday, when the UK was ejected from the Exchange Rate Mechanism and lost 18 percent in the following six months.
According to Reuters’ reports expectations are for another 10 percent decline and possibly a recession in 2017.
On Wednesday GBP/USD was seen at 1.32660.
Original Source: FXNet Market News