Pound to surge on positive Brexit deal
Published on 10.10.2018 09:29

The British pound has made a substantial recovery over the last 5 trading sessions against its US counterpart as hopes of a positive deal on Brexit continue to support the currency and the mystery of the deal is set to come to a head next week as Britain and the EU sit down for the Brexit summit.

A good deal for the UK is seen as crucial to the pound’s good fortunes and some say that investors should look at taking a long position in the pound because the chances of a positive outcome are high and there is to much too lose on both sides if no deal is reached.

Jordan Rochester, an FX strategist at Normura bank noted that the pound is currently sitting at historic lows as it was during the financial crisis which may not be justified at this time and believes the market is underestimating the chances of a positive deal on Brexit which could cause the pound to surge.

"Zoom out; from 1975 to today, the Pound is trading at historic lows or 1 or 2% from them. If you look at where it was in 1992, when we had Black Wednesday, ERM, Pound crashed and George Soros became a household name, we are trading at the same levels, and only in times of crisis has the Pound been trading around here," said Mr Rochester.

He believes a deal will be done on Brexit that will benefit the UK and if we look at other deals that were made recently, there is a tendency to leave everything to the last minute and tseems to keep investors on edge

"Last year we all got surprised when we got a deal agreed to in December. Everyone was saying it won't be done this year, it will be a catastrophe, and yet it was agreed at the last minute at 6.00am on a Friday morning if I remember rightly," says Rochester.


Andrew Masters

Analyst

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