The Future of the British Pound After Brexit: A Comprehensive Analysis

Since the Brexit referendum in 2016, the value of the British Pound (GBP) has fluctuated significantly. This article delves into the potential future of the GBP, examining current trends and forecasts to provide a comprehensive overview of what may happen to the currency in the aftermath of Brexit.

Current Trends in GBP and the Economy

So far, the impact of Brexit on the British Pound has been relatively muted, with no direct effects observed. This is due to the fact that there is no immediate evidence of a serious economic downturn caused by Brexit. In fact, economic growth in the UK is outpacing that of its European counterparts, with growth rates ahead of Germany and aligning with France and Italy.

As the UK shifts towards establishing its own trade deals, rather than simply rolling over existing EU agreements, the overall economic landscape is anticipated to improve. This shift is expected to benefit the British Pound in the long run, barring any further economic crises. Market analysts believe that the British Pound will continue to rise, albeit gradually.

Long-term Outlook for the British Pound

In the long term, it is predicted that the British Pound will continue to rise. However, an excessively high currency could lead to higher unemployment in certain sectors, as it makes UK exports more expensive internationally. On the other hand, a strong Pound offers a comfortable lifestyle for the wealthy section of society.

Historically, the British Pound has performed well against other major currencies such as the Dollar and the Euro. Prior to Brexit, the exchange rate of the Pound against the Euro was 92 pence for one Euro. By June of last year, the Pound was at parity with the Dollar and was only worth 83 pence for one Euro. Although the Euro has recovered slightly since then, the Pound remains strong against other currencies.

Impact of Brexit on the British Pound

During the Brexit referendum campaign, the British Pound dropped significantly. In anticipation of the potential 'no deal' scenario, the Pound has remained depressed, trading barely above parity with the Euro. This reflects market sentiment that purchasing Sterling is not advisable given the uncertainty and potential economic harm caused by Brexit policies.

Markets are inherently forward-looking and plan for known events such as Brexit, pricing in expectations and preparing for the outcomes they foresee. By doing so, they mitigate the likelihood and intensity of such events.

Conclusion

The British Pound is expected to continue its upward trend, but the pace at which it rises will depend on various factors, including the political and economic environment post-Brexit. While a strong Pound offers benefits to the wealthy, it may also lead to higher unemployment in certain sectors. As the UK gradually establishes its independent trade deals, it is hoped that this will lead to sustained economic growth, benefiting the British Pound and the overall economy.

Given the complex interplay of economic and political factors, it is crucial for businesses and individuals to stay informed and adapt to any changes in the Pound's value. By keeping a close eye on market trends and economic indicators, stakeholders can make more informed decisions and navigate the uncertainties of post-Brexit Britain.