Abstract
During the last decade, the use of online search traffic data is becoming popular in examining, analyzing, and predicting human behavior, with Google Trends being a popular tool in monitoring and analyzing the users' online search patterns in several research areas, like health, medicine, politics, economics, and finance. Towards the direction of exploring the Sterling Pound’s predictability, we employ Google Trends data from the last 5 years (March 1st, 2015 to February 29th, 2020) and perform predictability analysis on the Pound’s exchange rates to Euro and Dollar. The period selected includes the 2016 UK referendum as well as the actual Brexit day (January 31st, 2020), with the analysis aiming at analyzing the Pound’s relationships with Google query data on Pound-related keywords and topics. A quantile dependence method is employed, i.e., cross-quantilograms, to test for directional predictability from Google Trends data to the Pound’s exchange rates for lags from zero to 30 (in weeks). The results indicate that statistically significant quantile dependencies exist between Google query data and the Pound’s exchange rates, which point to the direction of one of the main implications in this field, that is to examine whether the movements in one economic variable can cause reactions in other economic variables.
Highlights
On January 22nd, 2013, David Cameron, UK’s Prime Minister at the time, stated that he would hold a referendum if he were re-elected in UK’s 2015 general elections [1]
The results indicate that statistically significant quantile dependencies exist between Google query data and the Pound’s exchange rates, which point to the direction of one of the main implications in this field, that is to examine whether the movements in one economic variable can cause reactions in other economic variables
Towards the direction of examining the predictability of Pound’s exchange rates with Euro and US Dollar using Google Trends data, the results of this study indicate that changes in exchange rates are depicted and related with online searches with a lag, with the latter depending on the which independent variables are examined
Summary
On January 22nd, 2013, David Cameron, UK’s Prime Minister at the time, stated that he would hold a referendum if he were re-elected in UK’s 2015 general elections [1]. On February 20th, 2016, he officially announced that a referendum was to take place on June 23rd, 2016. The question that the British citizens were asked to answer to was: ‘Should the United Kingdom remain a member of the European Union or leave the European Union?’, with the response options being ‘Remain a member of the European Union’ and ‘Leave the European Union’. Since 1973, the year that the UK became an EU member, only one referendum had been held-in 1975-where the country’s membership in the EU was put to the voting population’s deciding. The question was: ‘Do you think that the United Kingdom should stay in the European Community (the Common Market)?’, with about 67% of the population voting for staying in the EU [2].
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
