After the conclusion of the Brexit agreement, the pound may rise sharply. Aberdeen Investment believes that within three months of the signing of the Brexit agreement, the pound may climb to $1.50, a level not seen since the 2016 referendum. This would mean that the currency rose 15% from the current level of about $1.31, a feat that has only happened twice in the past 50 years: the 2008 global financial crisis and the 1987Global stock marketCrash.
According to Bloomberg’s report on Wednesday, British Prime Minister Teresa May invited the cabinet minister to read the draft of the Brexit agreement nearing completion. Investors are hoping for the British and EU to reach an agreement to reach a British retreat, which will benefit the pound. The pound has been this month. Up 3%. The agreement with the EU will allow the UK to begin a two-year transition period. For Aberdeen, which manages $736 billion in assets, this will greatly reduce uncertainty and help the pound reduce its losses since the Brexit.
Aberdeen fund manager James Ash, said he added a long position to the pound/dollar this week. "Agreed will mean that the UK will be in the EU equivalent for the next two years. The pound may cause a large margin for a long time. appreciation."
Stephen Jen, chief executive of London-based hedge fund Eurizon SLJ Capital, is more bullish than Aberdeen, arguing that $1.55 is the "fair value" of the pound.
This marked a turning point in the fate of the pound's suffering, bringing it back to the level between the last financial crisis and the Brexit referendum. In the week of the Brexit referendum, the pound fell by 5%, compared with nearly 10% in the week when the pound quit the European exchange rate mechanism in 1992.
Weekly risk reversal indicators show that traders' bearishness against the pound is the lowest since June.
According to people familiar with the matter, British Prime Minister Theresa May is preparing her cabinet to support the draft Brexit plan and can visit Brussels within a few days to start the final phase of the negotiations. Given that the Irish border and parliamentary approvals remain a potential stumbling block, caution may be required.
Bloomberg last monthAnalystA survey conducted showed that in the Brexit negotiations, the pound may only rebound to $1.40. Some people think there will be a two-stage rebound. If the British Parliament signs the Brexit agreement, then the second rebound will start, but this may not be an easy task.
Coutts&Co. Shanti Kelemen, the money manager, said the pound would rebound to $1.40 in "good news about the UK Brexit agreement." If you want to rise to the level of $1.50, you need a weak dollar and the Bank of England to raise interest rates at least once.
“At the current exchange rate, the pound is undervalued, and an agreement with the EU may bring a rebound,” Kelemen said, adding that Coutts increased the pound’s exposure after the 2016 referendum. “The real release is if the UK The uncertainty of Brexit is cancelled and the agreement is not limited to economic development, then you can see that the Bank of England will improveinterest rate. ”
German businessbankUlrich Leuchtmann, a currency analyst, believes that “in general, the market is clearly betting that an agreement will be reached, but in my opinion, things are not as optimistic as the current exchange rate level of the pound. Time is passing, the current situation It’s a mess, I think the current exchange rate of the pound ($1.31) is not attractive."
(Article source: Global Forex)