There are several determining factors to weigh in on the strength of a currency. Amongst these are the purchasing power of this currency, demand and supply in the foreign exchange market, political stability, and economic conditions. The GBP has great standing under the majority of these circumstances and, for this reason, is one of the strongest investment options for traders in the market. This article discusses the relevance of the pound in the forex market and other investment options with potential in 2024.
Why Trade GBP in 2024?
The GBP was the strongest currency globally until the loss of British sovereignty over other countries. The U.S. dollar came in as number 1 as it is the world’s reserve currency and the most traded among others. However, the GBP is worth more than the dollar, and this solidifies the narrative that there are loads of other factors that can determine the strength of a currency. Factors influencing GBP’s positions are purchasing power in exchange rates, supply and demand in trading forex, inflation rate, and more.
The British pound is the 4th most traded globally and can be easily paired with others like USD, EUR, JPY, and CHF for profit. Its profit potential is major as a result of its liquidity as well as the tight spread it offers to investors. High liquidity means a high number of people are willing to buy and sell this currency, making it easy to get in and out of the market at any given point. There is also a wider range in profit potentials because the probability of finding a much higher buy price is wide, as well as the possibility of getting extremely low sell prices. The currency’s popularity in the forex market also exposes investors to different pairs and ways to trade, from CFDs to futures and more. GBP trades come with many opportunities, and it’s easy to see why many investors flock to this market.
GBP has had impressive price performances over the years. CNBC revealed in 2023 that the British pound was the best-performing G-10 (group of 10) currency in 2023. It was up more than 3% against the U.S. dollar for over half of the year. Furthermore, the British economy succeeded in evading recession, and inflation was predicted to fall drastically from about 10.7% in 2022 to 2.9% by the end of 2023. The country’s fiscal position has improved drastically, and with that comes better performances in trading volume.
Investment Outlooks for 2024
Aside from the GBP, other currencies to consider adding to your portfolio are EUR, USD, JPY, and CHF. These other currencies are popularly traded options with great standing in the market. However, if you want to extend your investments beyond the forex market, the crypto market is forecasted to be among the top performers in 2024.
The Cryptocurrency Market
Cryptocurrencies spent most of 2022 and 2023 taking a bow, but word on the streets now is that these digital assets are making an incredible comeback. Bitcoin, the father of crypto assets, saw some significant increases in the later days of 2023. Today, BTC is over 100% higher than last year. The crypto market is buzzing, and many major investors are convinced of a new bull market wave. The overall market cap is $1.77 trillion today, over 70% higher than last year.
These increases can be attributed to several factors. One is the news of spot exchange-traded funds (ETFs) approval making rounds in the market. On the 10th of January, the Securities and Exchange Commission (SEC) officially approved the spot Bitcoin ETFs for institutions like Greyscale, BlackRock, Bitwise, and Fidelity. The advantage spot cryptocurrencies pose is that they expose the market to mainstream finance and thus can be a way to build better trust in the decentralised finance system. Also, it allows investors to access digital assets and crypto investments without owning them.
The market is responding positively to the spot Bitcoin ETF approval. Institutional interest in these assets also means there could be more approvals to consider, including the ongoing request for spot Ether EFT approval. Lastly, the growing spike in interest rates is increasing the focus on other assets like cryptocurrencies.
What Lies Ahead for the Global Financial Market?
2024 started positively for the global finance market, and we see loads of positivity to look forward to. It could be the best investment year for forex market traders and crypto investors. The stock market is also not left out of the equation, and the consensus analyst prediction is 5,090 for the S&P 500, which could give an upside of 8.5% from the current values. With the crypto market approaching the bulls, GBP exchange values rising, and more to look to in other markets, we could say there is no better time than now to invest in these financial assets.