Dollar and pound in 2021At the beginning of January, it is customary to sum up the results of the past year and try to predict the nearest prospects. The past year has been very difficult for the global economy and markets in general. The coronavirus pandemic has caused such damage to the economies of many countries, which, perhaps, can only be compared with the post-war period. The number of infections has already approached 90 million, almost 2 million people have died from this disease. It remains to be hoped that this year the situation will change for the better thanks to the vaccination of the population. As for the markets, they have demonstrated high volatility and, often, complete unpredictability in the past year. It is difficult for investors to make the right decisions in this situation. However, experienced speculators were able to make very good money on strong movements.

Dollar

Even during the election campaign, Donald Trump has repeatedly stated that the dollar is too strong and must be weakened. In fact, this desire of the president came true in the last year of his presidential term. True, this happened under the influence of a negative global event – the coronavirus pandemic. The injection of trillions of dollars into the American economy has weakened the country’s currency. DollarThe United States began to lose its popularity among investors. The emergence of huge amounts of funds provoked a rise in inflation and increased appetite for risky assets. The situation is unlikely to change dramatically in 2021. The dollar is likely to continue to fall. The likelihood of further weakening of the American currency increases considering the fact that the new President of the United States announced his intention to inject several more trillion dollars into the economy. Based on this, in the coming year, we can expect the upward trend to continue for the eurusd pair. Only the ECB, which does not like the strengthening of the European currency, can influence the dynamics of this market.

British pound

The weakening of investor interest in the dollar contributes to the flow of funds into other popular currencies, which include the euro and the British pound. And if the euro exchange rate largely depends on the dynamics of the American currency, then with regard to the pound, the situation looks rather uncertain. The exchange rate of the British currency will depend on two main factors. In the last days of last year, Brussels and London did manage to reach an agreement on Brexit. However, in the time trouble, they managed to agree only on the main issues that would allow maintaining relatively normal trade relations after January 1. At the same time, there are many unresolved problems associated with the country’s exit from the EU. The difficult epidemiological situation in the UK creates additional uncertainty. The timing of the British economic recovery is difficult to predict. If the country manages to cope with the problems that have arisen due to Brexit and the pandemic, then we can expect an exit from the downward trend of the British pound, which has been going on for several years, and a significant strengthening of the country’s currency. However, in the short term, this is unlikely.