Currency traders who were wary of positioning outright for a no-deal Brexit outc...
LONDON - Currency traders who were wary of positioning outright for a no-deal Brexit outcome seem to be finally be throwing in the towel: heavy selling has hit sterling this month and metrics such as derivatives and positioning suggest no respite ahead.
FILE PHOTO: Pound coins are seen in this photo illustration taken in Manchester, Britain September 6, 2017. REUTERS/Phil Noble/File PhotoJust a cursory reading of historical chart troughs shows $1.20 within easy reach; on Monday the pound fell below $1.23 for the first time since March 2017But some major banks have talked of the possibility it could breach post-Brexit referendum lows of $1.1491. And then sights get trained on the historic all-time low of $1.
The broad view that Britain would manage to agree some kind of transition trading agreement before leaving the European Union had until now kept investors more or less on the sidelines, out of concern that a last-minute compromise would send sterling rocketing higher. What has changed now is that the UK government under new Prime Minister Boris Johnson seems to be actively preparing for a no-deal outcome. Johnson’s pledge to take Britain out of the EU on Oct. 31 come what may, and his tough tone on Brexit talks seem to have galvanized market players into dumping the pound.
Then a growing swathe of dismal economic data has highlighted the Brexit fallout; it seems to have persuaded the Bank of England to turn more dovish and markets are ramping up bets on a rate cut by year-end
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