While even the most seasoned of Forex investors cannot peer through the financial “looking glass” to see what may be around the next corner, it is always possible to make some generalisations. 2016 has already proven to be a landmark year in terms of currency volatility and these movements could increase during the coming months. What can we expect in 2017? Let us take a closer look.
The Effect of the Brexit
It can be argued that the Brexit is set to be the most news-worthy event within the world of currency trading during 2017. We have already seen the pound weaken substantially against other benchmark currencies such as the euro and the dollar. This trend will likely continue. This is not due to the imminent Brexit itself (up to two years can be taken to finalise such a move) but rather, bearish sentiment of many investors. Growing concerns about international trade relationships, the domestic housing market and the interest rates set forth by the Bank of England should weigh heavily upon the pound. However, this may actually be good news for traders who are in the position to take advantage of such rather unprecedented movements.
A Weakening Euro?
It can also be argued that the Brexit can and will have a very real effect upon the value of the euro. This has less to do with direct financial figures as it does with many calling into question the solvency of the European Union itself. Continued political disputes within this 28-nation bloc are causing some to wonder whether or not the EU is nothing more than a “failed experiment”. So, we may very well see investor sentiment begin to ebb in terms of its long-term future. Remembering how fear can quickly cause a drop in inter-market values, it is not unreasonable to predict that the euro could see notable losses when compared to other currencies.
The (Predicted) Strength of the Dollar
The dollar has seen significant gains in relation to the euro and the pound. This stems from positive economic data emerging from the United States as well as the aforementioned events occurring in Europe and the United Kingdom. Could this rally continue into 2017? Most experts seem to say yes. In fact, some may begin to view the dollar as a safer haven. This will be even more relevant if the effects of the Brexit become more pronounced or in the event that the United Kingdom slips into recession (as some are already predicting). If this occurs, the price of dollar-based commodities will also rise.
The Emergence of the Home-Based Investor
Thanks to reputable platforms such as CMC Markets, more individual investors are entering into the world of Forex trading than ever before. This can help countless traders enjoy a steady stream of additional income. We also must view this trend from a macroscopic point of view. A higher number of investors could signal even more daily volume; particularly in reference to binary trades. More volume might hint at an increased level of fluctuation. This could once again be an excellent way to enjoy short-term gains.
While 2017 is still a few months away, it is always advisable to take a look at what we could see transpire in the not-so-distant future.