It is not a secret that politics has a massive influence on a country’s economy. As a result, it also affects the country’s currency. The biggest impact is caused by the news of great importance, that may lead to political instability. Such news includes the impeachments revolutions, death of political authorities or elections.
Brexit as a political news
To illustrate this, I will use an example from the United Kingdom. Britain held a referendum on Brexit on June 23, 2016. People voting on such an important matter affected the British economy as well as the British pound. The British currency has fallen by 10 percent against the dollar. The day after the vote, it has hit its lowest level in 31 years. This started the massive sale of the pound on the markets and buying other stronger currencies.
There are plenty of events that may influence the markets other than political news. Especially those sudden like terrorist attacks or environmental disasters such as tsunami, earthquakes or droughts.
Such unexpected breaking news will have a much stronger effect on the market than scheduled publications. You can read more about trading with the news.
Best of luck!
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