Currency News

Daily Exchange Rate Forecasts & Currency News

Pound Sterling (GBP) Forecast Falls on Worries over Brexit Deal

February 24, 2016 - Written by Ben Hughes

MP Michael Gove Comments Cause Pound Sterling (GBP) Exchange Rates to Extend Losses



The Pound Sterling (currency : GBP) has received another hammering from currency market participants during this morning’s trading session as fears grow that UK voters may come out in favour of a split from the European Union on 23rd June after David Cameron's reform deal failed to secure all the measures he was hoping for.

The assertion from leading ‘Leave’ campaigner Michael Gove MP overnight that the raft of reforms negotiated by the UK delegation in Brussels last weekend is not ‘legally binding’ as the Prime Minister has previously asserted came as a blow to Sterling. Gove stated that, ‘the facts are that the European Court of Justice is not bound by this agreement until treaties are changed and we don't know when that will be,’ sparking a row between himself, No.10 and several prominent legal figures including the current and previous attorney generals.

His words are likely to unsettle many voters who remain undecided and were weighing their decision on the proposed reforms.

Gove’s comments hurt the Pound which fell to its lowest level against the US Dollar for some 7 years earlier today. Cable touched 1.3876 as investors abandoned the Pound, and if FX insiders are to be believed, there may be further losses to come for the UK unit.

More than one leading investment bank has forecast that the Pound Sterling US Dollar exchange rate will fall to 1.2700 in the short to medium term.

Fund Manager Neil Woodford Hints that a 'Brexit' will be Beneficial for the Pound Sterling



Meanwhile, the Pound received another blow earlier when legendary fund manager Neil Woodford asserted that the EU In / Out argument is as broad as it is long. Woodford’s suggestion that, from an economic perspective at least, it makes little difference whether the UK remains in the EU or leaves, goes against conventional wisdom which dictates that the domestic economy will collapse would Brexit take place as capital investment would fall dramatically.

Advertisement
Woodford even hinted that a UK exit might be a positive for the Pound, observing that in the euroland, ‘ECB chief Mario Draghi is printing money and trying to do his bit, but the macro headwinds are intense and unemployment remains high. It is these problems that a UK exit could shine a brighter light on’. These words may cause may cause market participants to re-assess their medium term Pound Sterling forecasts.
Like this piece? Please share with your friends and colleagues:

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.


TAGS: Pound Dollar Forecasts Pound Sterling Forecasts

Comments are currrently disabled