Sterling rout not yet over as no-deal Brexit odds jump - Reuters poll

[snoop1130]

Sterling rout not yet over as no-deal Brexit odds jump - Reuters poll

By Jonathan Cable

 

FILE PHOTO: A pound coin is placed on broken glass and British flag in this illustration picture taken January 28, 2019. REUTERS/Dado Ruvic

 

LONDON (Reuters) - Sterling’s recent slide is not yet over as the chances Britain and the European Union part ways without a withdrawal deal have jumped again after arch-Brexiteer Boris Johnson took over as prime minister last month, a Reuters poll found.

 

Johnson, who was the face of the leave campaign ahead of the 2016 referendum and who took office on July 24, has repeatedly said he will take Britain out of the EU on Oct. 31 with or without a deal. Sterling fell to a low against the dollar not seen since early 2017 at the start of August.

 

Before that divorce date arrives, the pound will fall further and trade between $1.17 and $1.20, a Reuters poll of foreign exchange strategists predicted, below the $1.21 it was at on Wednesday.

 

“Fears of a no deal Brexit are likely to worsen, though we anticipate it will be avoided. Our official house view is that there will be a delay, but kicking the can down the road doesn’t ease uncertainty,” said Jane Foley, head of FX strategy at Rabobank and the most accurate forecaster for major currencies in Reuters FX polls last year.

 

Britain was originally due to leave the EU at the end of March but the departure date was extended.

 

The median forecast for a disorderly Brexit - whereby no deal is agreed - jumped in an Aug. 2-7 Reuters poll of economists to 35%, up from 30% given in July and the highest since Reuters began asking this question two years ago.

 

Forecasts in this poll ranged from as low as 15% to a high of 75%.

 

“Until now, it was difficult to know what a Johnson-led government would do about Brexit, given his indecisiveness, unpredictability and, at times, conflicting messages on Brexit,” said Daniel Vernazza, chief international economist at UniCredit.

 

“However, it now seems pretty clear that Boris Johnson’s strategy is to try to force through a no-deal Brexit on October 31,” Vernazza, who does not expect Johnson to succeed, added.

 

Economists in Reuters polls since the June 2016 referendum have consistently warned a no-deal Brexit would be the worst outcome for Britain’s economy.

 

But as they have since late 2016 when Reuters first started asking about the most likely eventual outcome, a strong majority of economists polled still think the two sides will eventually settle on a free-trade deal.

 

Again in second place was the more extreme option of leaving without a deal and trading under World Trade Organization rules.

 

The third most likely outcome was Britain remaining a member of the European Economic Area, paying into the EU budget to maintain access to the Single Market yet having no say over policy. Fourth place once more went to cancelling Brexit.

 

With a deal expected, median forecasts in the wider poll of over 50 forex market watchers gave a healthier outlook for sterling and it was expected to have rallied to $1.27 in six months and then be trading 10% higher at $1.33 in a year.

 

Against the euro, which may struggle as the European Central Bank is expected to ease policy in September, the pound will also gain ground. On Wednesday, one euro was worth about 92.1 pence but in a year, the poll said it would drop to 87.1p.

 

STALL SPEED

 

Brexit worries and a U.S.-China trade war have increased concern about a global downturn and Britain’s economy has struggled to gain traction.

 

Growth flatlined last quarter, the poll predicted, and the economy will expand only 0.3% per quarter through to the end of next year, a touch weaker than predicted last month.

 

However the country will probably dodge a recession - the median likelihood of one within a year was put at 35% and at 40% for one in two years, up five percentage points each from last month.

 

Other major economies are being supported by central banks easing - or about to ease - policy. But the Bank of England is not expected to change its key rate until 2021.

 

At its policy meeting last week the Bank lowered its growth forecasts due to increased Brexit worries and a slowing global economy, but stopped short of following other central banks and considering an interest rate cut.

 

Only 12 of 55 economists polled with a view on Bank Rate expected a cut this year or next and 19 had an increase pencilled in.

 

“While the buoyant wage growth backdrop means it is too early to be talking about Bank of England rate cuts, the increasingly uncertain Brexit outlook means it is very unlikely that policymakers will be looking at tightening policy in the foreseeable future either,” said James Smith, developed markets economist at ING.

 

-- © Copyright Reuters 2019-08-08

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[fishtank]

Well done Boris and the extremists.

Doing a great job.

Stuff the UK as long as you achieve your extreme right wing objectives. 

[Chivas]

Yep Sterling dropping against the Euro and Dollar this Thursday afternoon London

[Joe Mcseismic]

Not Exactly going out on a limb for that prediction.

[Denim]

Fantastic news for Brit expats thinking of going home because of more stringent visa rules.

 

Wow. I left the UK a relative poor man. If only we can get the pound down to 25 again I can go home the conquering hero !

[Mikisteel]

If you got 150k in USD currency right now in UK bank what do you do?

 

Hold hold hold and cash in when?

 

 

[sammieuk1]

Things are so bad for 50p looking pound the Turkish lira a world basket case currency is again gaining hourly as the foreigners and tourists cash in on a cheap UK????  

[CNXexpat]

[Dellboy218]

1 hour ago, fishtank said:

Well done Boris and the extremists.

Doing a great job.

Stuff the UK as long as you achieve your extreme right wing objectives. 

Written from an extreme left wing point of view.  There was a referendum in which more people voted to leave than remain.  Get over it and move on.  More votes wins, it's called democracy, try practicing it. 

[david555]

22 minutes ago, CNXexpat said:

Borrowed it from someone picturing it on evening Pattaya nigh street TT Exchanges 

[CNXexpat]

16 minutes ago, Dellboy218 said:

Written from an extreme left wing point of view.  There was a referendum in which more people voted to leave than remain.  Get over it and move on.  More votes wins, it's called democracy, try practicing it. 

So a Ponzi is fair too? Somebody promises that everybody becomes super rich and at the end only few become rich because everything was a huge lie. But the people decided (democratic) that they give the money. Or the grandma who was cheated by a fake policeman. But she decided to give him her money from her free will. All could find in the internet that they will be cheated but everything sounds so real, so they believe everything. Same as the Brexiteers. 

[elliss]

1 hour ago, Chivas said:

Yep Sterling dropping against the Euro and Dollar this Thursday afternoon London

 

 This is just a practice run ,  prepare  for the big drop.

    Cut your loses , and transfer your money over now i have, ouch..

   Project fact,  gbp is finished .

 

 

[ThePioneer]

2 hours ago, snoop1130 said:

Our official house view is that there will be a delay,

Who would ever have thought that?

[Scott]

Inflammatory post removed.  

[sunnyboy2018]

Its the uncertainty contributing to the sterling decline. When brexit is finally declared the uncertainty will end and the pound should start to rise again as sure as the Euro will decline.

[JRG23]

I have a real increasing hatred of Johnson and his right-wing henchmen/women.

And we thought politicians in this part of the world were selfish, lying, ba*&a%ds !!!

[kingdong]

would love to fast forward and see the state of the eu in 5 years time[if there is one]

[Bluespunk]

11 hours ago, Denim said:

Fantastic news for Brit expats thinking of going home because of more stringent visa rules.

 

Wow. I left the UK a relative poor man. If only we can get the pound down to 25 again I can go home the conquering hero !

Wonder if that was the expat brexiteer’s cunning plan all along?

[evadgib]

9 hours ago, elliss said:

 

 This is just a practice run ,  prepare  for the big drop.

    Cut your loses , and transfer your money over now i have, ouch..

   Project fact,  gbp is finished .

 

IMO the pound will be no lower on Valentine's day than it is today.

[evadgib]

23 minutes ago, JRG23 said:

I have a real increasing hatred of Johnson and his right-wing henchmen/women.

And we thought politicians in this part of the world were selfish, lying, ba*&a%ds !!!

The same can be said re Dom-the-weasel & Co in t'other direction.

[flossie35]

10 hours ago, Dellboy218 said:

Written from an extreme left wing point of view.  There was a referendum in which more people voted to leave than remain.  Get over it and move on.  More votes wins, it's called democracy, try practicing it. 

The advisory referendum decided nothing - just advised Parliament which decides. Parliament is supposed to decide in the national interest. Please explain why you believe brexit, which on all the evidence is bad for us in any shape but disastrous in "no deal" version, is in our interests? Significant that BJ if he gets his no deal wants a general election the next day before the chaos arrives.

[MartinKal]

10 hours ago, david555 said:

Borrowed it from someone picturing it on evening Pattaya nigh street TT Exchanges 

The graph shows continuing anxiety about the value of these Western heavily-indebted economies. And the slide continues today, even though the bank of Thailand has just reduced rates.

The Thai Central reserves of foreign currency measured in billions of dollars, 218. Growth is nearing 3%, inflation is subdued, there is little unemployment.

Those who may criticism of the Thai economy are trounced by the facts, those removed a savings here made a smart move.

 

Of course the future of the Thai economy is in doubt, as are the futures of all economies, given the current state of world affairs.  But in relative terms, the baht seems like a safe place to be.

 If you think that the system is in danger of meltdown, well then everyone will retreat to the dollar and the Thai baht will lose out and maybe you should be buying gold. But if you think the can will be kicked down the road or that it is possible to make fixes to keep things going, if you don't particularly want to fight the Fed, then the baht seems like a good place to be and this graph would give you confidence.

[david555]

19 minutes ago, MartinKal said:

The graph shows continuing anxiety about the value of these Western heavily-indebted economies. And the slide continues today, even though the bank of Thailand has just reduced rates.

The Thai Central reserves of foreign currency measured in billions of dollars, 218. Growth is nearing 3%, inflation is subdued, there is little unemployment.

Those who may criticism of the Thai economy are trounced by the facts, those removed a savings here made a smart move.

 

Of course the future of the Thai economy is in doubt, as are the futures of all economies, given the current state of world affairs.  But in relative terms, the baht seems like a safe place to be.

 If you think that the system is in danger of meltdown, well then everyone will retreat to the dollar and the Thai baht will lose out and maybe you should be buying gold. But if you think the can will be kicked down the road or that it is possible to make fixes to keep things going, if you don't particularly want to fight the Fed, then the baht seems like a good place to be and this graph would give you confidence.

Well ….for buying gold I agree for a 1/3 of possessions … only …. a little bit late to do now , if you see the Thai Gold Baht pricing …..  in 2009 I knew the gold baht price at 13800 baht   … and then many say Gold does not make profit …. agreed , but then I say "paper" must loose value then …., Gold can not be printed ...but on paper they (Governments  ) can be printed any "value lie" 

They knew why leaving the gold standard....

[Nigel Garvie]

2 hours ago, kingdong said:

would love to fast forward and see the state of the eu in 5 years time[if there is one]

Gloating over something that hasn't yet happened, and is unlikely to happen anyway, seems a rather unwise thing to do. Do you actually wish economic harm to the ordinary people of other European countries, if so then why? What has the Austrian baker, or the Portuguese dustman ever done to you?

 

One thing for certain is that we have messed up big time with the £ fast becoming worthless, maybe it helps us feel better if we focus elsewhere, even if it is a fantasy. 

[wombat]

13 hours ago, Mikisteel said:

If you got 150k in USD currency right now in UK bank what do you do?

 

Hold hold hold and cash in when?

 

 

wait till brexit happens 

[stephenterry]

13 hours ago, Mikisteel said:

If you got 150k in USD currency right now in UK bank what do you do?

 

Hold hold hold and cash in when?

 

 

There is little doubt that the US$ is a world-wide currency, that is currently under pressure by a very strong Thai baht. I certainly would hold it, though as, IMO, the pound will fall further than the US$. I expect £ to exchange at around 33-5 to the baht as Brexit day nears, but I don't believe it would go below 30 even if there's a no-deal exit, because UK economic fundamentals are solid, being the fifth largest global economy.  That could never implode in the short-term.

[Handsome Gardener]

6 hours ago, sunnyboy2018 said:

Its the uncertainty contributing to the sterling decline. When brexit is finally declared the uncertainty will end and the pound should start to rise again as sure as the Euro will decline.

Its nothing to do with uncertainty - that's the brexiteer word to divert from what's staring them in the face. Millions of spreadsheets would have been created since the referendum and they point to carnage. The markets aren't stupid, they know what's coming.

 

Its everything to do with a no deal Brexit - if that is declared you can kiss goodbye to the pound recovery, as the uncertainty will be just beginning. Cut out of EU trading deals with NOTHING to replace it. We will have the negotiating position of a lame duck with our big bad neighbour, the EU, undercutting us every step of the way.

 

Brexit has trashed the pound - anyone who thinks otherwise needs a frontal lobotomy! Brexiteers have to take full responsibility for that.

 

STILL waiting for a brexiteer to tell us why the pound isn''t going UP if Brexit is a good idea …….(5th request I think)

[stephenterry]

2 hours ago, flossie35 said:

The advisory referendum decided nothing - just advised Parliament which decides. Parliament is supposed to decide in the national interest. Please explain why you believe brexit, which on all the evidence is bad for us in any shape but disastrous in "no deal" version, is in our interests? Significant that BJ if he gets his no deal wants a general election the next day before the chaos arrives.

And you expect a rational answer?   

[Henryford]

Don't worry on 1.11.19 the Pound will be back upto 60 once we have left the EUSSR.

[Handsome Gardener]

2 hours ago, MartinKal said:

The graph shows continuing anxiety about the value of these Western heavily-indebted economies. And the slide continues today, even though the bank of Thailand has just reduced rates.

The Thai Central reserves of foreign currency measured in billions of dollars, 218. Growth is nearing 3%, inflation is subdued, there is little unemployment.

Those who may criticism of the Thai economy are trounced by the facts, those removed a savings here made a smart move.

 

Of course the future of the Thai economy is in doubt, as are the futures of all economies, given the current state of world affairs.  But in relative terms, the baht seems like a safe place to be.

 If you think that the system is in danger of meltdown, well then everyone will retreat to the dollar and the Thai baht will lose out and maybe you should be buying gold. But if you think the can will be kicked down the road or that it is possible to make fixes to keep things going, if you don't particularly want to fight the Fed, then the baht seems like a good place to be and this graph would give you confidence.

Good post with the exception the yen has always been the currency for flight (or meltdowns) and the baht is now being seen as a similar safe haven and won't be losing out anytime soon.

 

If the world globally hits some major snags, economical or warlike, expect the baht to strengthen. The only thing that will hurt the baht is an interior 'meltdown' and thats currently being stitched up too. Not looking good currency wise I'm afraid (unless you hold baht of course)