The all anticipated rally in the British pound may not eventuate according to some analysts as an enormous amount of damage has been done to the British economy which the country will have to recover from before we see any sustainable rally.
Recent data coming out of the UK shows a number of disappointing figures and as long as the Brexit mess drags out, things will only get worse.
The UK economy put in its worst performance for six years last quarter, which caused the Fitch Ratings agency to issue a downgrade warning, and confirmed that a no-deal Brexit may result in a rating cut from one of Europe’s biggest economies..
The real danger now for the British pound now is if no deal is achieved with Brexit and they crash out of the EU, this will be exasperated by the current state of the British economy and the chance of bigger falls in the sterling since the shock Brexit referendum cannot be ruled out
“We can already see quite clearly that we have a negative impact on the economy,” said Richard Falkenhall, SEB’s head of trading strategy. “Even if you get some sort of controlled withdrawal with a deal, the uncertainty will still be there. That’s one reason why we don’t see sterling rallying enormously.” Said Luke Hickmore from Aberdeen Standard Investments
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