Negotiating the pound sterling on the foreign exchange market :

After the US dollar, the euro and the Japanese yen, sterling is the fourth most traded currency on the foreign exchange market. It is found in about 12% of trade. What are the factors that change the price of the British currency? This is what we will see in this article.

A Pound sterling that is sensitive to the level of risk aversion

The British pound works with the global economy. When the latter is going well or showing signs of recovery, the pound appreciates on the forex. On the other hand, when times are more difficult, the British currency tends to depreciate. You guessed it, so the pound is not a safe haven. As a result, it is favored in times of strong risk appetite.

A Pound sterling heavily influenced by the economy of Great Britain

Among the developed countries, the United Kingdom has the most volatile economic growth. Indeed, since 2008 its GDP collapsed by 4.9% then it recorded a slow and laborious recovery before greatly accelerating thereafter. On the foreign exchange market, the pound follows these developments, when growth is present and appreciates when the country goes through periods of recession it depreciates.

As you can see, sterling is dependent on the perception of the level of risk in the markets. If the risk aversion is strong, the currency depreciates, if the risk aversion is low, the pound appreciates. It is also sensitive to the country's economic cycles. To negotiate pairs including the pound, you are interested in the economic fundamentals.