Jul 03, 2019There's little doubt that market traders will be a little preoccupied in June, with a potential escalation of the trade war between the United States and China a key focus for investors. After all, the recent negotiations have ground to a halt amid more threats of tariffs, with China having threatened to blacklist several American companies if the row continues.
However, the unveiling of the much-publicized 5G network could also prove to be an interesting development in the United Kingdom, one that could significantly impact trade, logistics and the underlying value of the British pound. But how exactly will 5G connectivity influence trade and the financial markets in the U.K., and could it help to boost the value of the national currency against the backdrop of Brexit? Let's find out.
How Will 5G Connectivity Boost the U.K.'s Markets and Logistics Industry?
Even on a fundamental level, the introduction of 5G connectivity could impact how efficiently individuals trade. If traders are using online platforms such as Oanda or a mobile app like the MetaTrader 4, for example, high-frequency traders may be able to leverage faster processing speeds to execute multiple orders in real time. The only question that remains is whether this will have a noticeable impact on typical traders, for while 5G may be up to 20 times faster than its predecessor, the current network technology is more than fit for this purpose.
When it comes to logistics, however, the introduction of 5G connectivity could have a seismic effect while also bringing the burgeoning Internet of Things (IoT) to life. More specifically, it could underpin the type of live information system that tracks delivery items from factory to customer, in a bid to create more efficient supply chains that break down the boundaries of international trade.
This would also create a constant flow of information between key stakeholders, helping them to track parcels accurately even when they sit in transit dead-zones or transition between warehouses and key delivery points. In this respect, the emergence of 5G connectivity could not have come at a better time for the United Kingdom. After all, the industry (including shipping, air and rail freight) is home to more than 56,000 businesses that employ an estimated 2.2 million people and approximately 8 percent of the workforce.
The U.K. logistics sector is also ranked eighth in the global marketplace, so it stands as one of the most advanced and competitive in the world. As a result, 5G can help to secure the industry's standing in the wider world, helping to negate the potential negative impact of Brexit in the process.
How Might 5G Networks Underpin Trade Between the U.K. and the U.S.?
The decision to unroll 5G technology has also coincided with Donald Trump's state visit to the U.K., where a future trade deal between Britain and the U.S. was one of the main talking points. During his visit, the U.S. President spoke in overwhelmingly positive terms about the future trade between these two nations, suggesting they may be able to double or potentially triple the size of their deal once the U.K. has left the European Union.
Trump's reputation as a tough negotiator means these words must be taken with a grain of salt, of course, while the precise terms of trades and the conditions that may be imposed by the U.S. may not be entirely beneficial to the U.K. However, mere talk of a deal helped to boost the value of the GBP/USD pairing, although this has since come under further pressure ahead of the Bank of England's upcoming speech. Still, a strong and lucrative trade deal post-Brexit would boost the performance of the pound and potentially minimize losses should the U.K. leave the E.U. on no-deal terms.
There's no doubt that 5G connectivity would help the U.K. to cope with higher volumes of trade, while the additional application of RFID technology would also enable the tracking of international shipments in real time. RFID (short for radio frequency identification) is a technology that encodes live digital data and relays this through radio waves.
The Last Word
From a foreign exchange (forex) trading perspective, 5G connectivity could definitely provide a timely boost to the pound post-Brexit, and potentially influence strategies in the near-term. With high-frequency traders also able to leverage 5G networks and their incredible speeds when executing a high volume of orders, there's no doubt that this technology will have a significant bearing on the forex market in the coming months.
Andre Gwilliam is a freelance writer working toward a future aim of running his own writers company. He writes across a variety of subjects that are close to the heart of the U.K. economy, including property, investments, business logistics and market trends. He has been writing for the past three years, having graduated with a degree in English literature and creative writing. Andre is open to collaborations to benefit his growing portfolio.