The pound has reached record lows whilst the dollar regains strength, What is happening?

The value of the GBP has reached record lows this week as the lowest the pound has ever been from this point is in 1985. This shows us that these are truly unprecedented times as the recent world events are eroding away investor confidence. Whilst this is happening the dollar seems to be gaining in value as investors are selling the pound and buying more dollars to act as safe haven in these uncertain times. What is the future of the pound looking like？

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Why is the Pound tanking？

Great Britain like the rest of Europe is taking the recent world events negatively and it is gouging through the countrys economy. The Russia/Ukraine war has caused major energy supply issues for the continent as the recent record high oil and gas prices have caused major inflation within the region. The rest of Europe was dependent on Russian Oil and gas to power businesses and homes, and now that Russia has cut off that supply line considerably the economies of these countries are going to suffer as they try to find ways to fill the void lets by this sudden drop

.The war is not eh only reason why the Pound is rapidly declining. Recently the prime minister of Great Britain Borris Johnson resigned and was replaced by Liz Truss. Her first proposed policy changes will allow for major tax cuts fueled by increased government spending and debt. These policy changes were not welcomed as the recent sharp decline in the value of the pound reflected the poor confidence investors retained in these new policies. It is unfortunate that .. first policy implementations are met with such a disastrous event, We will have to see later on in the future how the country will come to accept or reject her.

As a trader, you are able to make money regardless of whether markets are moving up or down so there are ways that can benefit from these currency movements. More and more investing in pouring into the dollar and the pound I losing value so it may be recommended that you short the pound and go long on the dollar. This is to be done with caution. As said before GBP pounds tend to be volatile so you need to ensure that your risk management is in top form. Be sure to keep an eye out for any upcoming GBP economic events as these will usually act as the instigators of the large movements.