Sterling To Slump On No-Deal Brexit, Rise A Bit On Orderly Exit: Reuters Poll | 11/14/2017 | Staff
gbabii05gbabii05 (Posted by) Level 3
LONDON (Reuters) – Sterling will gain between 2 and 5 percent if Britain parts ways with the European Union with a divorce deal but will slide between 5 and 10 percent in the event of a disorderly Brexit, a Reuters poll found on Wednesday.

Less than eight weeks before Britain is due to leave the EU on March 29 there is still huge uncertainty about the terms of its departure and fears are rising of a no-deal Brexit without a transition period to minimize economic disruption.

Britain - Deal - Strategists - Question - Poll

Asked what would happen to sterling if Britain leaves with a deal, strategists who answered an extra question in a regular monthly poll were almost unanimous in expecting it to make gains. All of them said the currency would fall if Britain crashes out without a deal.

But the prospective gains were weaker than potential losses.

Rationale - Markets - Moment - Terms - Markets

“The rationale would be that markets are going to wait right up until the last possible moment to sell off in terms of how a no-deal might materialize. Markets will hold out for a last-minute breakthrough,” said George Brown at Investec.

“If that wasn’t to materialize then you will see a big, sharp depreciation,” Brown added, saying a deal would take form over time and so should be gradually priced into the currency, hence the more modest gains.

Withdrawal - Agreement - Prime - Minister - Theresa

The withdrawal agreement Prime Minister Theresa May negotiated with the EU was rejected by the British parliament last month. London and Brussels are now arguing over whether the deal can be changed, raising the possibility of a delay to Brexit, a last-minute deal or a no-deal exit.

Medians in the wider poll, taken between Jan. 31 and Feb. 5, see the pound making solid gains on the dollar in the coming year, which suggests foreign exchange strategists expect an agreement to...
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