Pound may experience further slide vs euro

  • by Ofeed Team
  • June 25, 2019, 17:46 AM
  • 579 Views
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The sterling will drop to the lowest level since 2017 versus the euro, with the expected adverse impact of the Brexit erasing the European Central Bank's accommodative monetary stance, according JPMorgan Chase & Co analysts.

Brexit woes intensified as Johnson Boris, the closest candidate to succeed Theresa May, told the cabinet that the British Parliament was ready to implement the accord without agreement.  

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The British currency will decline about 3 percent below its current level by the end of 2019, which would be the lowest exchange rate in 21 months, analysts said.

Given the elevating risks of a no-deal Brexit on October 31 and the inability of the Bank of England to raise interest rates due to the expected negative impact of the Brexit on the economy, the pound could still see further decline.

Since the beginning of April, the pound slumped has fallen nearly 3.5 percent against the shared currency, noting that the GBPEUR pair is meanwhile trading 0.07 percent lower at 1.1167. That is the lowest level in five months.

Setbacks to the pound-sterling risk for six months, a measure of market sentiment and positioning, have been increasingly in favor of the common currency since early May, suggesting that investors are betting on more gains.

In the options market, the price of puts compared to calls is heading towards a peak not seen since April.

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