Rebound in Forex Currency Pairs Is Advancing, Undeterred by The Current Uncertainty

Business 27 October, 2020

There is a dynamic relationship between the pandemic and the economy, the likelihood of infection negatively influencing the participation in the labor and consumption market. Layoffs, an increasing rise in unemployment, and the severe level of disruption to many industries represent just some of the consequences of the tight measures put in place to curb the coronavirus outbreak. The global economy took a toll, which was mirrored in a drop in currency value, the major currency pairs heavily traded in the foreign exchange market remaining under pressure as many tried to pull money from the bank. The Australian dollar, for instance, experienced the effects of early lockdown and reduced demands.

GBP/USD Pair Is Moving at High Speed

In spite of the current uncertainty, there has been a slight rebound in the pound and other Forex market majors. Activity has increased from lower levels and the better-than-expected results helped calm down new traders and professionals. Several factors led to the GBP/USD pair catching momentum, of which example can be made of Michael Gove’s statements about the no-deal Brexit. As the deadline looms, the negotiations between the United Kingdom and Europe have stalled. A no-deal Brexit is quite possible. The American currency, on the other hand, is maintaining its dominance in emerging markets owing to reviving hopes for a COVID-19 vaccine.

The GBP/USD exchange rate is now 1.30 and it’s highly likely that the pair will maintain a neutral standpoint. The uncertainty of the Brexit trade deal negotiations has helped maintain the exchange rate at 1.30. Over the past couple of weeks, the GBP/USD  pair has successfully held its account, the value being somewhere around 1.3000/1.3080. Nevertheless, there is no way of knowing how the United Kingdom’s departure from the European Union will impact the pound. Meanwhile, the US dollar risks falling below 92.70. Traders need to take cues from developments deriving from the fiscal stimulus, not to mention the coronavirus saga.

Will the Rebound Session Across the Forex Major Last?

The prospects for each currency pair will depend on how fast life and, most importantly, economic activity will return to normal parameters. The outlook for the foreign exchange market is generally positive, positivity which is centered around the prospect of another stimulus package that would help reduce the current uncertainties for the global economy. The present gains and economic inroads would be endangered if the lawmakers aren’t able to move forward with the new fiscal stimulus package. It remains to be seen if the positive pattern continues throughout 2021. In other words, we shouldn’t get excited just yet. If the current volume levels will last, all the better.

Traders Are Taking Advantage of The Sharp Rebound of The Foreign Exchange Market

Many are taking advantage of the positive moves in certain currencies (trying to make up for lost income) – right at the moment that it’s happening. This benefits not only traders but also Forex brokers and the industry as a whole. The recent price movements of currency pairs have managed to entice even hard-to-please investors who were planning to make a complete retreat. Given that the Forex market offers various income-generating opportunities, getting involved is worthwhile. It’s not recommended to buy or sell currency without carefully considering the trades that are about to place. An in-depth analysis can help traders figure whether to make out buy or sell decisions.

Participants in the foreign exchange market have re-assessed their investments and are now seeking new opportunities, passing trades through A-book or B-book brokers who offer the most competitive spreads. It’s not hard to understand what A-book and B-book means in Forex trading. A-book means that the trade is passed through the market and undertaken by a liquidity provider or a multilateral trading facility. A-book brokers are basically transaction facilitators. B-book means that the broker themselves processes the transaction instead of passing it along to, say, a bank. It’s up to the trader to determine what the better option is.

The foreign exchange market generates a great amount of revenue in the business world. For the time being, the United States has the strongest dominant currency in the world. It can be paired along with other currencies, such as the Euro, British Pound, Swiss Franc, and so on. Taking into account the ongoing issues revolving around the COVID-19 pandemic, the recovery we’re witnessing is fairly uncertain. It’s time to trade with caution. Numerous online trading platforms have implemented preventative measures such as limiting the number of buy and sell orders. The aim is to protect individuals’ finances during these hard times. The opportunities are multiplying, but so are the threats. Applying risk management strategies can help reduce the risk for professionals.

What Influence Will the Global Pandemic Have on The Future of Forex Trading?

The effects of the coronavirus outbreak are visible in the trading markets. Surprising as it may seem, the health crisis isn’t all bad, encouraging the international flow of capital. Trends will emerge from this pandemic, which will become long-term. The heightened adoption of technology is one such example. Brokers are working from home thanks to communications and trading technology. Technology has been supporting the recent change in volume levels, making it possible to deal with higher levels of trading activity. Undoubtedly, there will be an increased demand for access to trading services like mobile apps and cloud services, so vendors ought to step up their game.

The global economy is slowly but surely moving into positive territory. It hasn’t yet recovered the losses suffered at the beginning of the COVID-19 pandemic, but we’re not living catastrophic economic times. Currencies are performing better than initially expected, with modest increases in price, but there is no way of knowing what the future has in store. Perhaps the other majors will join the GBP/USD. The impossibility to predict the future translates into risks. Indeed, software is capable of predicting trends, but it can make errors.  The foreign exchange market won’t shut down abruptly. Regardless of the outcome, there will be a future for Forex.