Sterling will rally around 6% against the euro if Britain leaves the European Union with a deal, an outcome looking somewhat more likely after British lawmakers seized control of parliament to try and block a no-deal Brexit, a Reuters poll found.
GBP fell to a three-year low on Tuesday after Prime Minister Boris Johnson’s implicit threat to lawmakers to support him on Brexit or face an election sent investors rushing to dump British assets.
But while the currency rallied on Wednesday following Johnson’s defeat late on Tuesday, it is likely to face more big swings as the battle over Brexit rages on.
Over three years since Britons voted to leave the EU, there is still no clarity over how the two sides will part ways – or if they even will. However, Reuters polls of economists since the June 2016 referendum have repeatedly said a free trade deal will be the most likely eventual outcome.
According to a median forecast in an extra question in the poll of 66 foreign exchange strategists, taken before Tuesday’s vote, the pound would strengthen against the euro in the month after if Britain leaves with a deal.
On Wednesday On Wednesday, GBPEUR was worth about 1.1060 hitting 1.1106 in early trade this morning but could only get you between 1.1764 if a deal is reached, according to the poll.
This morning GBPUSD is trading at 1.2215 hitting a high of 1.2255.
This Article was contributed by Reuters.