The Current State of British Pound Exchange Rate
The British pound exchange rate has experienced significant volatility since the Brexit vote in June 2016. The pound initially weakened significantly against the dollar, with the pound-dollar exchange rate falling by over 20% in the six months following the referendum. Since then, the pound has experienced periods of recovery, but it remains well below pre-referendum levels. In January 2021, the pound-dollar exchange rate was around 1.37, up from its post-referendum low of 1.20, but below its pre-referendum level of 1.50.The Impact of COVID-19 on British Pound Exchange Rate
The COVID-19 pandemic has had a significant impact on the British economy and, consequently, the pound exchange rate. The pound initially weakened against the dollar in the early days of the pandemic, as investors sought out safe-haven assets such as the US dollar. However, the pound has since recovered some ground, as risk appetite has returned to the markets. The UK's successful vaccination program has also provided a boost to the pound, as investors look ahead to the reopening of the economy. One factor that could continue to impact the pound exchange rate in 2021 is the ongoing uncertainty about the UK's future relationship with the EU. While a trade deal was agreed upon in December 2020, issues around financial services and potential changes to regulations could still impact the pound in the future.The Outlook for British Pound Exchange Rate in 2021
The outlook for the British pound exchange rate in 2021 is likely to be influenced by a range of factors. The pace of the economic recovery from the pandemic, as well as the success of the vaccine rollout, will be key factors to watch. Any shifts in central bank policy could also impact the pound. In the short term, the pound could continue to benefit from the positive sentiment surrounding the success of the UK's vaccination program, which has led to some optimism about the pace of economic recovery. However, the ongoing uncertainty around Brexit and the potential for changes in regulations could still cause volatility in the currency markets. Overall, the outlook for the British pound exchange rate in 2021 is likely to be shaped by a range of factors, both domestic and global. While there are some reasons for optimism about the pound, there are also risks that could lead to continued volatility in the markets.
