New post
George Ma
in
Forex
May 30 11:40

Deutsche Bank doesn't favour GBP

The UK economy is particularly vulnerable to the effects of the epidemic.
48
0
According to Deutsche Bank AG, British pound should suffer losses due to a combination of three factors: the negative news on Brexit, the prospects for the introduction of negative rates and the UK government's measures for late termination of quarantine.
They recommend selling GBP on the trade-weighted index.
Strategists argue that the dependence of the economy on consumption makes it particularly vulnerable to the consequences of the epidemic. The large commercial real estate market in Britain also represents a risk to the financial stability of the country.
Forex markets have pawned expectations of the introduction of negative interest rates in the UK in May 2021 after changing the tone of monetary policy statements, which recently ceased to exclude such a scenario. Strategists wrote that the transition to negative interest rates will hit the British pound hard because of the current account deficit in the UK.
There is also a significant risk associated with Brexit. Failure to agree on a trade deal with the European Union by the end of the year will lead to even greater pressure on GBP.
According to David Bloom, head of FX strategy at HSBC Holdings Plc, the EU's joint debt repayment plan increases the risk.