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The outcome of geopolitical events, especially the bigger ones, influence currency movements. A long period of uncertainty is anticipated until the outcome from such events transpires. Not to mention the differing remarks from politicians, policymakers, and stakeholders, as well as experts and rating agencies.Hence, traders are disoriented and worried.

Let’s discuss this matter using an example. Case in point: the British pound.

Britain is poised to hold an in/out referendum on June 23, voting on their fate inside or outside the European Union. UK Prime Minister David Cameron and former TUC head Brendan Barber, in a Guardian article, argued a Brexit would lead to lost jobs and lower salaries. Conversely, former British finance ministers Norman Lamont and Nigel Wilson argued liberty from European regulation would benefit London in the long stretch.

Whilst politicians and business leaders in the United Kingdom are debating about the issue, the British pound glides up and down. However, on Friday, the currency managed to touch its highest in 12 weeks. Sterling stood at $1.4665, on course for a 1.5% weekly advance.

The uncertainty is prevalent at various facets: the result of the referendum, differing opinion between Britain and Scotland, and ending trade relations with the region.

Europe is one of Britain’s biggest trading partners. The nation’s current annual trade with the region stands at £229 billion ($335 billion). If Britons decide to exit the union, that amount might be affected instantly. Plus, companies may evaluate the advantages and disadvantages of having their headquarters in the UK. The country might lose its competitive edge within the bloc as well. British people would lose some benefits such as to work and migrate freely.

Amidst the skepticism, the UK may broker more favorable trade agreements with the EU or its member states. It could alleviate the impacts of closing out free trade zones, but the process is tiresome and time-consuming.

Inhibitions behind geopolitical events drive the currency’s value and market movements. To those who trade the British pound, they have no other choice but to deal with volatility and uncertainties.