How has the value of GBP compared with USD since Brexit?

There’s nothing quite like political or economic upheaval to get the Forex market to its most volatile best.

Because let’s be honest, when we are trading and trying to make some money, volatility – where it is somewhat predictable – is an advantageous condition for traders to exploit by utilizing the tools offered by the likes of TorFX to track the value of various currency pairs.

When the United Kingdom voted in the Brexit referendum to leave the European Union, it precipitated a period of instability in the value of pound sterling when compared to other major currencies.

Now, of course, such uncertainty has been exacerbated by the coronavirus pandemic, and the economic woes – and probable recession – that it will cause.

If we compare GBP to, say, USD, we expect the American currency to come out on top as far as its relative value is concerned. That’s not to say that the US dollar has been bulletproof. The antics of Donald Trump, and particularly his trade war with China, have seen to that. Unfortunately, the uncertainty that has emerged from the Brexit process has left sterling lagging behind and has had many traders checking their risk-and-reward position.

Here’s a timeline of the value of GBP, and how it has fluctuated since the uncertain days of 2016.

June 2016 – The aftermath

On June 22nd 2016, the value of the GBP/USD currency pair was 1.48 – a rally came after the betting markets and polls suggested that the ‘Remain’ vote was likely to come out on top.

However, on June 23rd, it was confirmed that the UK would be exiting the EU as the ‘Leave’ vote scored a remarkable victory – the value of GBP to USD dropped to an eye-watering 1.33 in less than 24 hours.

October 2016 – Article 50

The process of leaving the EU was a long and winding road for the UK government, and first of all, they needed to get Article 50 over the line.

That announcement was made in October 2016 – not long after Theresa May had replaced David Cameron, and it was confirmed that the Withdrawal Bill would be signed and ratified in March 2017. Or so we thought.

That was absolute confirmation that the UK would be leaving the comforting bosom of the EU – the GBP/USD pair dropped to a low of 1.22, its ten-year nadir.

June 2017 – Election special

The value of ‘the Cable’ remained at around the 1.20-1.30 mark for the next few months, with Brexit negotiations seemingly hitting deadlock.

And then a breakthrough came: it was announced that there would be a snap election in the UK, with the Prime Minister’s aim to try and strengthen her position and clear the path for complete negotiation autonomy.

But we know what can happen to the best-laid plans…

Theresa May had her majority reduced, and only a fragile coalition with the DUP kept her in power. The value of GBP – which had been edging up in the weeks leading to the election – plateaued once more at 1.26.

December 2017 – The power of whispers

As the festive period drew near, it was revealed that the UK and the EU were closing in on some common ground in their negotiations.

From the start of December to its peak in the middle of the month, the GBP/USD pair enjoyed a 0.03 pump – in the context of things, that was significant.

March 2018 – Signed on the dotted line

One of the most controversial aspects of the Brexit agreement – how the UK would transition from being an EU member – was a sore point.

But it was announced in March 2018 that terms had been agreed for the transition, and the steady gains GBP had enjoyed in the first few months of the year peaked at 1.43 – ironically, this was the highest it would be valued up to the present day.

August 2018 – Big bear

The threat of a ‘No Deal’ Brexit, which would have seen the UK leave the EU without any kind of trade agreement, precipitated a devastating bear run in the summer of 2018.

Lows of 1.27 – not seen for more than a year – were commonplace, and resistance was such that the value of GBP didn’t climb above 1.34 until December 2019.

October 2019 – Signed, sealed, delivered

A bull run for GBP emerged in October 2019 after a formal deal was completed between the UK and the EU.

The market reflected as such: on October 8, GBP/USD was worth 1.22. By December, it had peaked at 1.34.

If that doesn’t let you know how the Forex market is inextricably linked to global politics and economics, nothing will.