Market news
17.11.2020, 07:43

Pound is seen falling 5% if U.K. trade talks with EU go nowhere

Bloomberg reports that the pound will probably weaken by 5% if the U.K. and European Union fail to reach a trade agreement.

The currency may fall to $1.25 by the middle of next year, according to a Bloomberg survey of nine strategists, as the disruption exacerbates economic damage from the pandemic.

“The prospect of a no-deal exit still involves a substantial decline in sterling’s value, as the fragile U.K. economy experiences another downside shock that can’t be met with wide-sweeping fiscal stimulus measures, and is likely to involve negative rates from the Bank of England,” said Simon Harvey, a foreign-exchange analyst at Monex Europe.

That said, the results were less pessimistic than data gathered from a similar survey in June, which showed respondents expected the pound to slump to $1.18 if there’s no deal. A survey in August 2019 suggested the currency would fall to $1.10, the weakest in more than three decades.

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