[ad_1]
So far, this Q3 has been an
exhilarating roller-coaster for the markets with popular CFDs reaching record-breaking lows and
highs. With rising inflation and bearish market sentiment, traders are hesitant
to make the next move.
The forex market has been under the
spotlight with powerful currencies tumbling to levels not seen in decades. The
British Pound witnessed one of its most turbulent couple of months with UK
inflation reaching a 40-year high of 10.1% in August 2022 and the GBP falling
to its lowest level ever against the U.S. dollar in September, reaching
$1.0349.
As the British economy has been
struggling to push through, the US dollar has been gaining power.
What’s causing the drop of the British pound?
This year, the pound is among the 20 worst-performing currencies,
as it tumbled by more than 20% against the dollar. This was primarily a result
of the new Conservative government’s announcement of a spending and tax plan,
which promised steep tax cuts primarily to benefit the wealthiest individuals,
along with expensive measures to help consumers and businesses combat the
painful rise in energy prices. These emergency budget measures aimed
at boosting the ailing British economy.
Why is the US dollar so strong?
Dollar investments have become
increasingly attractive due to rising interest rates and a relatively bright
economic outlook in the United States. Almost every asset class has seen poor
returns in 2022, with the exception of the United States dollar. This makes the
USD a safe haven for many forex traders worldwide. Moreover, the Dollar’s
strength is even more significant when compared with the underperformance of
stocks, bonds, real estate, and cryptocurrencies, even when inflation is rising,
and recession is just around the corner.
What to look out for in the future
As a trader, you should know that the
exchange rates at which the currencies are traded are constantly changing. This
is because currencies are impacted by a variety of aspects such as:
·Speculation: The currency exchange rate is quite
susceptible to currency speculation, with traders buying and selling based on
the expectation of future events.
·Economy: Strong currencies are a hallmark of
economic success since investors are eager to invest there. As a result, demand
and the value of the local currency rise.
The bottom line is that being a trader
entails having the ability to understand how global economic events can affect
your trading positions. The volatility of the markets requires traders to be
flexible and able to adapt to fluctuating market conditions. Your XPro Markets account is equipped
with the tools and resources you need to stay
ahead of the news and boost your trading strategies.
Risk
Warning: Contracts for Difference (‘CFDs’) are complex financial products, with
speculative character, the trading of which involves significant risks of loss
of capital.
Disclaimer:
This material is considered
a marketing communication and does not contain and should not be construed as
containing investing advice or a recommendation, or an offer of or solicitation
for any transactions in financial instruments or a guarantee or a prediction of
future performance. Past performance is not a guarantee of or prediction of
future performance
[ad_2]
Source link
