- Analytics
- News and Tools
- Market News
- Sterling’s reserve currency role is under threat – Natixis
Sterling’s reserve currency role is under threat – Natixis
Sterling is a major reserve currency, accounting for 5% of global foreign exchange reserves while the United Kingdom accounts for only 3% of global GDP. But GBP’s reserve currency role could be under threat, according to analysts at Natixis.
What will happen if GBP’s reserve currency role diminishes?
“Sterling’s reserve currency role is under threat, particularly since the Brexit referendum, in the face of: The UK’s relatively weak growth; The reduced appeal of the United Kingdom for corporate investment; Awareness of the small size of the UK economy relative to its reserve currency status; Labour force decline, due to the departure of Europeans; And the onset of a vicious circle where because pound sterling is less attractive, it depreciates, which in turn makes it less attractive still.”
“If Sterling’s share of global foreign exchange reserves falls, foreign holders of pounds will become sellers. The market for Sterling will then have to rebalance after this selling shock, which will require a huge depreciation of the Pound: To offset central banks’ sales of GBP; To balance the UK’s current account without capital inflows.”
© 2000-2024. All rights reserved.
This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).
The information on this website is for informational purposes only and does not constitute any investment advice.
The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.
Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.
Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.
Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.
Bank transfers
