The political turmoil in the UK has caused a lot of confusion and fluctuations in currency exchange rates and foreign investment.
Investors around the world determine the strength of the pound based on how strongly they believe the UK is a good destination for their money. Unfortunately, political news and periods of political turmoil, whether they be for better or worse, always cause fluctuations in currency exchange rates.
Recent months have appeared as something of a roller-coaster when put on a graph. The most important metric is, of course, the Pound Sterling’s relationship with the Euro, which has likewise seen huge turbulence in the months leading to Brexit. Yesterday, the Pound rose as rumors of a breakthrough deal emerged. After the breakthrough new Brexit deal was confirmed, the Pound Sterling took a light dip before rising to the highest level we’ve seen in 18 months. Effectively, the news conference reassured investors enough that they were willing to start parking their money back in Britain.
Unfortunately, we all know that in politics nothing is ever certain and sometimes periods of instability or transitional phases can wreak a certain level of havoc on international trade and investment. As the next morning started, the overnight deal was seen as weaker than originally believed, causing the Pound Stirling to fall even faster than it rose.