The City of London has always been a strong contender for being the financial capital of the world. It has been an ongoing debate for many a year, whether New York or London is the world’s financial capital. Putting aside the history and looking at just the present, it seems the fears that Brexit will reduce the financial clout of London, may have been a bit premature.
The Bank of England in its latest triennial report, show that trading volumes for forex products daily increased by 12% on a yearly basis, helping it hit $2.86 trillion by April 2019. The latest figure is the highest since records began in 2004 and surpasses the previous record of $2.72 trillion set in April 2018.
The survey from the BoE also revealed that London is still comfortably the largest currency trading centre in the world, with approximately 40% of all global forex trading volumes passing through the UK’s capital city. The daily turnover is easily the highest in the world, almost 3 times more than the daily turnover of New York in second place. To put this into perspective, in 1998, 32.6% of the world’s forex trading was done in the UK against 18.3% in the US.
Proving popular amongst professional forex traders was the EUR/USD which saw an 18% increase in trading volumes, whilst the GBP/USD saw a 16% increase in trading volumes, hitting a record daily volume high of $376 billion.
London remains the crown jewel in the UK’s financial services industry which contributed 6.5% to the UK’s economy in 2017 and employed a staggering 1.1 million people. Whilst the London Stock Exchange remains eclipsed by other global exchanges, (it’s fourth behind the NYSE, NASDAQ and Tokyo), London is only getting stronger as a financial hub. This is of course, despite the European Union’s best efforts to make the German DAX or the French CAC as the financial epicenter of the world.
The news that the UK is at the very least maintaining a competitive edge as an October No-Deal Brexit seems likely, will provide some comfort to those expecting Armageddon from the British public’s decision to leave the European Union in the June 2016 referendum.
With new Prime Minister Boris Johnson taking over from Theresa May this week, the data from the Bank of England’s triennial report is exactly the kind of strong data needed to convince the split British public that the UK will thrive and prosper once it has broken the shackles of the European Union.