The Brexit is going to come to the UK as the result of the 2016 referendum in the UK. 52% of the votes were cast in favor of the Brexit scenario back then. Chances are, the Brexit is going to affect the entire economic and financial system of the United Kingdom, including its national currency - the British Pound.
For those of you who don't know, the Pound has been around since the 11th century. It has always bee a special currency, with its own rules. Some experts belive that despite of the form of the Brexit, the British Pound is unlikely to feel serious pressure. Simply put, they don't expect any considerable changes in the exchange rate between the British Pound and other major currencies like the U.S. Dollar and the common European currency.
Pound Dependent On Euro?
Both experts and international investors are convinced that the fate of the British Pound is closely tied to the Eurozone. Back in 1998, many experts predicted the marginalization of London City and the decrease of the pound value. So, staying away form the Eurozone was the only right decision back then. Still, the prediction was incorrect as London City gained strength and the British Pound continued growing in value against the common European currency. Over time, more and more investors started seeing the British Pound as a safe-haven asset, especially amid the economic decline in the Eurozone coupled with Eurozone crisis in 2012. This stimulated the British Pound as well as the assets denominated in it. However, in 2016, when the UK decided to quite the EU for good, the British Pound hit a major low, and the British national currency cannot still restore its strength against other majors ever since. So, now everyone is asking what's going to happen to the British Pound after the Brexit.
Controversial Forecasts
Some experts say that the British Pound is going to feel the downward pressure over a rather long period while others stick to the opposite prediction - the British Pound is going to recover and consolidate shortly after the Brexit takes effect. Well, any of the two opposite scenarios may eventually manifest itself. Anyways, the British Pound keeps on playing one fo the key role in the global financial system, and its role goes far beyond being a national currency or a reserve currency. At the same time, other major currencies are also fiat money and risky assets by nature. With that being said, the common European currency is definitely not the best alternative for those who would like to get rid of the British Pound.
