Latest Poll: Will the British Pound Head for Parity to the Dollar?

I have visited the UK many times over the years and each time I landed at the airport the exchange rate seemed to be around the same value, US$1.55-1.60 per GBP. I am a forex trader so I know the wide gyrations this currency has had over the years but each time it seemed to come back to this level. However, the currency has now entered a new chapter with the decision to Brexit from the EU seeing it fall to 30 year lows. This leaves the currency in uncharted waters as the break below 1.35 has made finding a floor guesswork.

To put the price action in perspective, GBP/USD traded at a high of 2.1160 on November 9, 2007 to a low at 1.2798 on July 6, 2016. Part of the sharp depreciation can be explained by the global financial crisis and a recovery in the dollar. It wasn’t until the risk of a Brexit started to get factored in that the British pound moved out of what was essentially a 1.50-1.70 range that lasted for several years once it came off the November 2017 low. From a high at 1.5006 in the early morning of June 24, 2016 when the market was discounting a to stay in the EU to the low at 1.2798 after the shocking result, the currency fell 14.7% in less than two weeks, a mammoth devaluation for a major currency (note, our EU referendum tracking poll was the only one to consistently call for its onset a Brexit outcome).

Since bottoming on July 6, the GBP had stabilized and even tried to recover (although intra-day volatility remained high) but the recent aggressive easing of monetary policy by the Bank of England has put fresh downward pressure on the currency. GBP/USD closed the week back below the psychological 1.30 level and this has led to fresh talk of how low it might go and whether it could reach parity.

In this regard, we have created a tracking poll asking Where will the British pound trade vs. the US dollar?

Click to participate in our poll GBP/USD poll

Jay Meisler, founder

Global Traders Association

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.