Poll: British pound to bounce if UK avoids no-deal Brexit
The British pound will get a post-Brexit bounce if the UK leaves the European Union with a deal, a new poll of economists shows.
However, if no Brexit deal is reached sterling will suffer further losses against the dollar, according to Reuters’ survey.
Read more: Sterling jumps to push FTSE deeper into the red
If an agreement is made sterling, which was trading at around $1.23 this morning, would rally and trade between $1.27 and $1.34.
“A lot of bad news is priced into the GBP so we would expect a relief rally to some extent, if a deal is reached,” said Shaun Osborne at Scotiabank.
However, if the UK leaves in a no-deal Brexit the pound would sink and trade between $1.10 and $1.19, Reuters’ poll found.
Two respondents to the poll said it could reach parity with the dollar, which has not been seen before.
Prime Minister Boris Johnson this week made an offer to the EU in an attempt to avoid a no-deal Brexit on 31 October. However, analysts are sceptical that the EU will agree to the offer and that an agreement can be struck before the leave date.
The British pound has been rocked by the uncertainty surrounding the UK’s future relationship with the EU since the 2016 vote to leave.
Read more: Sterling falls nearly one per cent against the dollar
Signs of a deal or progress in negotiations have boosted the value of sterling over the past three years.
But indications that the UK will crash out of the union have sent the pound spiralling.
Last month the currency fell to lows not seen since the mid-1980s, if 2016’s “flash crash” – believed to be due to human or algorithm error – is not taken into account.