Wednesday 18 September 2019

Brexit fears pushing pound toward parity with US dollar, analysts warn

A Bloomberg survey this month estimated that the pound will slide to $1.10, should the UK exit the bloc without an agreement. (PA)
A Bloomberg survey this month estimated that the pound will slide to $1.10, should the UK exit the bloc without an agreement. (PA)

Anooja Debnath

Suddenly the idea of pound parity with the US dollar seems less far-fetched as the risk grows that Britain may split with the European Union without a deal.

Rupert Harrison, a fund manager at BlackRock, is short the pound and sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley's recent forecast that the currency could plunge toward $1 on such an outcome.

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That is not the majority view yet, as a Bloomberg survey this month estimated that the pound will slide to $1.10, should the UK exit the bloc without an agreement.

New prime minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure, and fanning pessimism toward the pound.

Sterling has slid more than 7pc in the past three months, the worst performance among major currencies. "The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome," said Harrison, who manages more than $10bn (€8.9bn) in assets at BlackRock.

Bloomberg

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