Sterling to rally 6% against euro if Brexit deal agreed:
Reuters poll
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[September 04, 2019] By
Jonathan Cable
LONDON (Reuters) - 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.
The pound <GBP=> slumped 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.
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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 afterward if Britain
leaves with a deal.
On Wednesday, one euro <EURGBP> was worth about 90.4 pence but would
only get you between 85 to 88 pence if a deal is reached, according to
the poll.
"GBP should rebound after October 31, assuming that either a no-deal
Brexit is somehow averted, or it is 'managed' successfully enough via a
stopgap, stand-still trading arrangement with the EU that minimizes
economic dislocation," said Everett Brown at IDEAglobal.
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![](../images/090419pics/busine29.jpg)
Pound Sterling notes and change are seen inside a cash resgister in
a coffee shop in Manchester, Britain, Septem,ber 21, 2018.
REUTERS/Phil Noble
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Johnson has repeatedly said Britain will leave the EU on Oct. 31 and he will not
seek an extension as his predecessor did earlier this year.
If the more than four-decade long marriage ends without agreement, the euro will
strengthen and likely reach parity with sterling, the poll projected. The median
forecast range was 95-100p.
The two currencies have never reached parity since the euro was introduced at
the start of 1999. But 13 of 24 strategists in the extra question said it would
reach - or even pass that level - with the most pessimistic prediction at 110p.
Forecasts in the wider poll said sterling would trade against the U.S. currency
at $1.21 in a month, $1.25 in six months and $1.30 in a year, weaker than
forecasts given last month. The pound was trading around $1.216 on Wednesday.
Against the euro the one-, six- and 12-month forecasts were 92.0p, 90.0p and
88.5p respectively.
(Polling by Khushboo Mittal, Tushar Goenka and Manzer Hussain; Editing by Andrew
Cawthorne)
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