The GBP has taken a beating in recent days, falling steeply against the USD since the unexpected outcome of the so-called Brexit vote, with 52 percent of British citizens voting to leave the European Union in June.
The pound fell 10% to a 31-year-low of 1.315 pounds per dollar on June 27, on the first trading day after the vote. While the pound has rebounded slightly, it is still under pressure. The dollar, meanwhile, has emerged as a safe-haven, with investors piling into the U.S. currency.
Analysts expect a continuation of such volatility, which is the main factor when it comes to the question of what do with GBP USD, buy or sell. Just because the result of the vote was a preference to leave the European Union, whether that will actually happen, on what terms, and according to what timeline remains unclear.
It is this uncertainty, more than anything else that is supporting the volatility when it comes to GBP USD. The uncertainty and volatility goes beyond the financial markets and are being felt throughout the British political sphere, with the prime minister recently resigning.
In addition to the uncertainty about if, how and when the United Kingdom would leave the European Union, many predictions also see an exit from the E.U. as negatively affecting economic growth and the business world. Britain also saw its government bonds downgraded after the voting result. This is also not good news for the pound, despite its history of being a strong and stable currency.
For those with a long-term view, buying pounds now, at a historically low rate, could be a good investment, as some still assume that the dust will settle and England will recover from the turmoil in good shape. However, even for those with a long-term view though, there is a lot of guess work, with the continuing volatility it is hard to know if the pound’s slide is over or just beginning. Right now, the only certainty when it comes to the GDB USD is volatility.