Pound Crumbling under pressure
7 August, 2019
Pound sterling remains under pressure across the board with the European union now operating with the idea of a no-deal, after excepting Boris’s plans are not a bluff about a no-deal Brexit on the 31 of October.
With a no-deal Brexit on the horizon, it appears to be the UK government’s “central /Only scenario” on the cards at present according to the daily telegraph.
From the arrival of Boris into power, we have had trough after trough, with chunks being taken out of the exchange rate day by day.
Nomura a Japan-based global investment bank has ran some numbers and arrived at for the Pound to settle in a no-deal scenario the UK’s GDP would need to greater than 2 %, This is a concerning time with it being as low as -5.6% in Q1.
The UK at present is in a current account deficit meaning the UK imports more goods/ services than it exports resulting in an outflow of currency.
This is putting a tremendous amount of downward pressure on the pound as the UK is spending more than it takes in.
So where does this leave the value of sterling?
Analyst Walter Zimmerman from ICAP suggests the pound could continue to fall hitting GBP/EUR 1.05-1.02 and GBP/USD 1.14-1.18 Pre Brexit Before a layer of consolidation may occur.
At present, there is no certainty to where the pound may go, with it breaking multiple support levels across most major currency’s.
In the last few days for GBP/EUR we have seen a low of 1.0810 and for GBP/USD a low of 1.2080
Today at market open Sterling Euro was 1.0860 and cable being 1.2169
If you are unsure how Brexit may affect your currency requirements in the future, please get in touch with our caring team of currency consultants to discuss the options you have to minimize your Fx Risk.
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