The British Pound trades in a large shadow — the uncertainty around the U.K. pulling out of the European Union. Traders must balance a hard line some European countries are taking with the U.K. insistence of a soft Brexit with murmurs that there may even be a new vote. How will this uncertainty resolve itself?
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Nicknamed “Cable,” GBP/USD is the third most traded currency pair in the world, behind EUR/USD and USD/JPY. Helping trading in the pair is natural economic activity by the two countries, which trade and invest more heavily with one another than nearly anyone else.
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With Brexit looming, the British Pound is more volatile than normal. In the first six months of 2018, the price traded in a 13-cent range, a roughly 10% move. As the date for Brexit moves closer to the January 2019 date when EU and British parliaments must ratify the Brexit treaty, it’s hard to imagine this price will not be more and more volatile.
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