The GBP (Great British Pound) saw a massive raise in the forex market last night, and many investors are wondering what caused this sudden surge. To understand why the GBP saw such a rise, it’s important to look at the factors that are driving the forex market.
One of the primary factors that caused the surge in the GBP last night was the announcement that the UK and the European Union (EU) had reached a post-Brexit trade deal. After months of negotiation, both parties finally agreed on a deal that would preserve the close economic relationship between the UK and the EU.
This news was widely welcomed by investors as it removed the uncertainty and risk associated with a no-deal Brexit. A no-deal Brexit would have meant that the UK and the EU would have traded on World Trade Organization terms, which would have resulted in tariffs and other trade barriers. This would have had a negative impact on the UK economy and could have led to a sharp drop in the value of the GBP.
Another factor that contributed to the surge in the GBP was the announcement by the Bank of England (BoE) that it would not be cutting interest rates. There had been some speculation that the BoE would cut interest rates in response to the economic impact of the COVID-19 pandemic. However, the BoE decided to keep interest rates at 0.1%, which helped to boost investor confidence in the UK economy.
Furthermore, the GBP was also boosted by a weaker US dollar. The US dollar has been under pressure due to the ongoing COVID-19 pandemic, which has led to a lot of uncertainty in the global economy. This has caused investors to seek out safe-haven currencies such as the GBP, which has contributed to the rise in its value.
In summary, the surge in the GBP last night was driven by a combination of factors, including the post-Brexit trade deal, the decision by the BoE not to cut interest rates, and a weaker US dollar. These factors have helped to boost investor confidence in the UK economy, which has led to a rise in the value of the GBP. However, it’s worth noting that the forex market is highly volatile, and the value of the GBP could fluctuate rapidly in response to changing economic conditions.
