The national currency is a more complex phenomenon than just a means of exchange in the international market. It contains many other dimensions, such as geopolitical and symbolic. All of them should be studied and included in the GBP/USD forecast. Quotes can be viewed from different angles when making a
forecast:On one hand, they reflect the momentary alignment of forces in the international economic and financial markets.On the other hand, they symbolically reflect the strength of countries from the geopolitical perspective.Therefore, no matter how the relative value of GBP falls in comparison with the USD, maintaining its nominal value above the dollar is one of the UK's most important tasks. When compiling the GBP/USD forecast, you can be sure that the nominal value of GBP still will continue to be higher.
GBP/USD: An Incomplete Divorce
Almost two and a half centuries have passed since the War of Independence. However, in the symbolic space of national currencies, the pound sterling is stronger. It will be possible to say that the USA has finally defeated Great Britain in one case. If this threshold is overcome and the nominal value of the dollar becomes higher, it is what Britain does not want to allow. That is why maintaining the cost of GBP above USD is such a priority for the government. The Bank of England is ready to use various monetary policy instruments to keep the GBP/USD forecast for the nominal value of the pound sterling favorable.
Invincible Pound Sterling
The remoteness of the United States from the European continent has become an essential factor in its rise in the 20th century. This position is still a significant factor in making the GBP/USD forecast. When European countries wore each other down in bloody wars, the United States made money on the supply of weapons, which allowed it to turn into a creditor of the European countries. At the beginning of the 20th century, they were in debt, and the dollar was almost five times cheaper than the pound sterling. In the past century, Great Britain has taken on two of the strongest challenges:
- Participation in World War I as part of the Entente
- Involvement in World War II that plunged Britain into economic hardship
As a result of these two wars, the GBP exchange rate against the dollar fell to 1:2.8 in 1949.
How the Russo-Ukrainian War Affects GBP/USD Quotes
The current situation is a distant echo of two world wars, which inevitably affects the GBP/USD forecast:Great Britain and other European countries suffered economic losses due to the armed conflict in the territory of Ukraine. The sharp rise in energy prices and the need for military assistance are additional aggravating factors for the country's economy.The USA is also experiencing an increase in inflationary processes and a rise in the price of energy resources, but its vulnerability in these circumstances is much less.
Will the Face Value of GBP Fall Below USD?
When making a GBP/USD forecast, it is essential to consider that a stronger pound sterling is a source of pride for the British and a symbol of invincibility. Therefore, despite its steady relative weakening to the dollar throughout the 20th century, crossing this line would have had a negative impact on British public opinion and self-perception. Maintaining its nominal value above the dollar is not only a matter of economics and finance but also a political will and decision. Great Britain demonstrates that even in two and a half centuries, its will could not be broken.-