No deal may kill the pound

 

Depending on how much risk you are prepared to take, the British pound may be a good trading opportunity in the year closes out which is highly connected to the upcoming negotiations on Brexit.

The odds of Britain reaching a deal with the EU to exit the European Union currently stand at 50-50 and many expect to see similar falls in the currency like we saw in the aftermath of the Brexit vote if no deal is reached.

"The day after the UK voted for Brexit, the pound suffered the biggest single day loss for a G10 currency in recorded history," said Fiona Cincotta, a senior market analyst at online trading platform City Index.

"The pound could potentially replicate this decline." She added.

The deadline for a deal to be reached is the end of 2018 which is drawing closer by the day and some analysts believe the UK government may use all of this time to make a decision but in the end a deal will be reached and the pound will rally as a result.

“Our baseline case is still that there will be a deal between the U.K. and the EU and that Prime Minister Theresa May will still be in Number 10 Downing Street at the end of 2018,” said Philip Shaw, chief economist at Investec.

 “On that basis, it is easy to see sterling recovering, perhaps through the $1.30s, if not $1.40.” he added.


Analyst

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