I don’t know if you’ve been watching the financial news in the past two days or have been reading any economy reports, but it seems that investment fear and uncertainty have trebled at the very least and that the financial world is in total chaos…
… OK, so I’m exaggerating a bit. It’s no where near as bad as being described as chaos but the global economy is certainly in turmoil right now. The Greek crisis is influencing the entire global economy. In case you don’t believe me you should know that Wall Street fell by about 3% yesterday with stock markets in Asia falling as well (Tokyo dropped by 3.1% and Taiwan by 0.5%).
There is no doubt that Forex traders need to pay attention to these developments as they continue to unfold in the near future.
The current situation seems to favor the US Dollar. There are no political or economical upheavals on the horizon for the US while fear is rampant in Europe over additional troubled economies in the Euro Zone. The Euro seems to be headed into a decline, or at least, stagnation in the short-medium range.
As to the British Pound, the future looks bleak as well. Britain was severely hit in the Global Economic crisis of 2008-2009 and it is facing massive problems. A solution now seems to be far off as preliminary results of the national elections held yesterday show a likely stalemate in the British Parliament.
According to preliminary results, neither of the two big parties: labour and conservatives have won enough seats to be able to rule on their own. The Conservative party is predicted to win 307 seats, 19 less than the 326 required to hold a majority in parliament. The prospect of a coalition government (caused by the most closely held elections in Britain in past decades) spells future difficulties in making hard and unpopular financial decisions, the kind that are required to pull Britain out of the financial troubles she’s facing and into a brighter future.
Needless to say, this is not good for the value of the GBP. Already, the Pound is losing value against the USD (click here to view the current trend of the GBP/USD), and there’s no telling when this will stop as it will be several days, at the very least, until the political landscape of Britain will become clear. There’s even the chance (and fear) of another election in the near future in case the new coalition or minority government will find it hard to rule effectively.
I advise all traders to pay close attention to financial and political news from Europe and Britain in particular in the near future.
In other news: I hope you’ve had a chance to watch the new video by the guys at OU Forex Trader. It’s eye opening. Click here to watch their video before it’s taken down
