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Analysist see more strenght in the pound
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Loading...After the dramatic week for Brexit, strategists see signs pointing to more pound strength.
According to a survey there is just a 9 percent chance that the U.K. will leave the European Union at the end of March without an agreement. Much more likely is that the exit will be delayed or even that Theresa May’s deal will get through Parliament. Both of these outcomes will be pushing the pound higher.
The respondents see a 54 percent probability of a delay beyond the deadline on March 29, pushing the pound up to $1.33. The next most likely scenario is that May somehow gets her deal through the Parliament, with a 37 percent chance. That’s also seen as the best scenario for the pound, fueling a rally to $1.38 which will happen for the first time since April 2018.
The realization that the deadline is approaching is favorable for the conditions.
The probability of a no-deal Brexit is below 10 percent, according to the survey. This chance was about 20 percent in January.
Goldman Sachs is betting on further gains for the pound, predicting that the rally will continue. Long positions in the pound are now looking the most common trade, especially in the options markets.
Source: Bloomberg Finance L.P.
Chart: Used with permission of Bloomberg Finance L.P.
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