Discussing the direction of forex market in 2021
April 16, 2021 (Investorideas.com Newswire) A lot of the countries are now working on a roadmap for an easing of lockdown in 2021, it would now seem as though we can begin to plan for the months ahead. Many forex traders are interested in the fate of the US dollar and the British Pound. Can we successfully predict the market direction for forex traders? Like every other industry, forex trading markets were also heavily affected by the COVID-19 pandemic, and it has left a trail of economic destruction in its wake.
As there is a promise of a post-pandemic recovery, we might see some huge changes in the exchange rates this year. However, there is some uncertainty and no one can guarantee which factors will have a strong influence and steer the forex market. Many experts believe that there will be an increase in the number of forex traders because as the industry tries to recover it will provide us with more opportunities to make profits. The forex market is already the largest financial market and trades worth trillions of dollars happen everyday. To become a successful forex trader it is important to have a strong trading strategy and a reputable broker or a trading platform that will help you with your forex trading journey. If you are thinking about entering the forex market as a trader, choose from this source a broker that you think will meet all of your needs. The right broker will provide you with support, guidance and helpful tools to help you in every step of the trading process.
Many successful forex try to predict the trends and movements in the market and place their trades based on their predictions. Making informed trading decisions is equally as important as it is to have a good trading strategy and a well known broker. However, trying to predict the direction of the market, market movement and trends is not a walk in the park, especially in the middle of a global pandemic. However, these predictions should help traders make better trading decisions and make profits through online forex trading.
The US Dollar
Unfortunately, 2021 might not be a very fruitful year for the US dollar as the currency has weakened significantly against the Euro and the Pound. Moreover, the enforcement of Donald Trump's policies was a notable setback as it caused trade tensions with China. The US dollar, like most currencies, also suffered from the effects of the COVID-19 pandemic on the forex markets. Analysts predict a continuation of decline in 2021 for the US dollar. Taking all these factors into account, the US dollar might experience a loss of up to 8% of its value against major currencies.
Only time can tell what these predictions will come to. However, there are a few factors that could have a positive impact on the US dollar. If China's economy strengthens and Chinese trade improves it could cause an increase in the demand for US imports. The possibility of interest rate cuts outside of the US could increase if there is a reduction of upward economic momentum countries other than the United States.
The British Pound
he British Pound has successfully outperformed a number of its forex trading rivals and has exceeded expectations. Unfortunately, by exceeding expectations there have been some concerns as the British Pound also encountered overbought conditions. Forex analysts believe that the British Pound will continue this run until the end of 2021. Boris Johnson's speech in February 2021, outlined the roadmap that will set the UK on a cautious, slow course toward economic recovery. The British Pound has since soared against its peers.
The pound-dollar and the pound-euro exchange rate reached new highs. Moreover, the travel and hospitality sector is set to return in the next couple of months. Therefore, the average consumer in the UK is likely to spend a sizable amount as they escape lockdown. This sort of a spending pattern may lift the total GDP to just 2.5-3% below its pre-COVID-19 level by July 2021.
Analysts believe that this combined with a rapid economic recovery could increase the pound-dollar exchange rate to 1.45 and the pound-euro rate to 1.16 this year. Of course, all of this will depend on how successfully the government of the UK can enforce its roadmap plans.
Conclusion
Predicting the direction of any financial market is never an easy task and the unusual times that we find ourselves in have made it almost impossible to make an accurate prediction. This is because different countries will recover from the COVID-19 pandemic at different rates, depending on a number of factors. The foreign exchange market is expected to experience a year of blows, monumental spikes and risks as we all try to recover from this global pandemic.
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