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Is GBP/USD headed towards 1.20 post-Brexit?

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Voting Style: Open Point System: 7 Point
Started: 6/30/2016 Category: Economics
Updated: 2 years ago Status: Debating Period
Viewed: 390 times Debate No: 93236
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The British pound plunged to 1985 lows against the US dollar post-Brexit. Leading forecasts suggest GBP/USD is heading down to 1.20 by year-end, do you agree?

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Firstly - I feel it would be wise to mention that I was one of the people that voted to remain within the EU for several reasons (work related, personal opinion, economics). After the shell shock of the vote I believe every one of us thought that the pound would devalue; though potentially not to the level it did!

I know quite a few people who were shocked by the fall but feel that GBP/USD falling that low and staying that low by year end would require several "domino effect" decisions to occur.

Firstly the pound (and the FTSE) recovered better than expected after the news - despite the uncertainty of when and how Britain will leave the EU market. From a political view point, I feel this is due to strong leaders within the Conservative party being put forward, votes of no confidence being put forward by the Labour party and several key "brexit" MP's announcing that Britain wants to remain close to the EU. All this in turn has hopefully calmed the market and its fear that Britain will completely isolate itself from the EU and its gateway status into the single market..

An agreement to have access to the single market, while controlling our own taxes/charges to financial companies (looking at Singapore style super charged economy) would certainly be an attractive option for every major operation in the world due to the current infrastructure and status of the London as the historic financial center of the world.

Obviously this may change but with several key politicians declaring their intentions over the next week or so I suspect we'll see some fluctuations in the coming months (hopefully for the best).

Outside of this - there are several other initiatives that the UK can use to stimulate the private sector. For example SME type businesses may be set for a massive boon in their ability to do business within the EU / Worldwide trade markets which make up a 47% of the UK Economy by removing EU bureaucratic "red tape" that has hindered them in the past.

It is also prudent to consider the state of the US political landscape - with a large split in voting confidence in the current presidential election from within the US & externally, surely this has to be considered when discussing the strength of the USD over the upcoming months.
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