The Two Key Factors Causing Pound’s Decline

The pound has been sluggish lately, and the following 2 factors, among others, have played a crucial role in the pounds continuous decline.

1.Brexit uncertainties remain

Brexit trade talks have been halted due to the global pandemic, and combined with the remark of government spokesman Slack on Thursday that Britain will not extend the transition period of Brexit, investors doubt that the two sides will be able to settle the Brexit trade deal before the end of this year.

2.Investment sentiment has deteriorated

With the temporary stock market rally that lasted just 2 weeks, the constantly shrinking economic indicators and the gloomy global economic outlook projected by major investment banks and financial institutions, the severe impacts of lockdown measures on business activities have begun to show, while market optimism was dampened as well.

Britain has a well-developed financial service industry and London is a widely acknowledged global financial capital. In times of volatility, frightened investors have greater demand for capitals and once they liquidate pound assets, it will create downward pressure for the pound.