The British pound has been taken to the woodshed in a manner of speaking, undergoing a rather staunch decline during 2016 as the run up to the Brexit referendum ultimately coalesced into an outright capitulation of the currency. To date, the GBP has overtaken the Argentine peso as the worst performing currency of 2016 at roughly the midpoint of the calendar year.
Brexit-induced worries were the largest culprit for the beleaguered currency, which manifested themselves into an all-out maelstrom of events that left analysts scrambling to find a floor for pairs such as the GBP/USD. Even before the eventual Brexit votes were tallied, brokers were hastily sending emails to clients warning them of reduced margins in a bid to prevent the same market chaos wrought by the Swiss National Bank crisis just one year before.
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By the numbers, the GBP lost more value vs. the US dollar among 31 major peers in 2016. Year-to-date, the GBP has lost more than -12.0% vs. the USD, beating even the Argentine peso, Mexican peso, and Chinese renminbi over the same period. Perhaps of even greater note for GBP bulls is the uncertainty facing the country and the currency itself. With a fresh floor being threatened and the GBP already operating at 30 year lows vs. the USD, it is anyone’s guess as to how low the British currency could actually fall by years end.