Pound sterling could collapse by another 16% as 'incredibly complicated' Brexit becomes clear, says Deutsche Bank

[OhSusana]

Sterling has endured a veritable tumble since the UK voted to quit the EU in June. But and it is nowhere near done yet, according to Deutsche Bank.

In an interview with Bloomberg, George Saravelos, the German lender's global co-head of foreign exchange, said the pound could fall as low as low as $1.05 against the dollar, or another 16 per cent as the "incredibly complicated" nature of Brexit becomes ever more clear...


Not great news for expat pensioners, if this turns out to be true, over the next few years.
And Frankfurt will certainly be pushing to take over as the finance centre of Europe, replacing London.

[geoffreys]

What an absolute load of rubbish. Deutsche Bank are scared of the euro zone and EU collapsing as they stand to go bust as a result.
Pure scaremongering.
Geoff.

[Devil]

JP Morgan:

Pound Sterling
“We still expect GBP to remain weak on hard Brexit uncertainty, but forecasts were tweaked 2.3% higher in 1H and 1.1% in 2H (to range around 1.2 for most of the year but rise to 1.25 in 4Q).

If we are wrong and the economy remains resilient through the summer, we will need to review the extent of GBP weakness, and indeed it is not inconceivable GBP could appreciate for a time if the BoE does indeed hike.

BNP Paribas:

GBP:
The GBP will remain in focus heading into the ruling on Brexit from the Supreme Court, expected on Monday. The government is generally not expected to win this appeal, but we think the significance of this ruling has diminished since last month’s parliamentary resolution supporting the Q1 timeline for Article 50.

We continue to believe the GBP is trading near levels reflecting a worst-case scenario for trade and capital flows, and therefore expect long-term-oriented investors to be buyers below GBPUSD 1.20.

Crédit Suisse:

The Pound:
“While it's true that leaving the single market comes under the banner of a hard outcome, it's also the case that the promise of parliamentary votes and transitional deals can be taken as silver linings by those hoping for a more measured and less confrontational end outcome with relatively low market and economic volatility."

HSBC:

Pound Sterling will resume its slide against the Euro in 2017 say forecasters at HSBC.

Germany and Spain are tipped to lead a continued Eurozone recovery whilst Sterling is undermined by the triggering of article 50 and Brexit uncertainties finally become manifest.

As such, HSBC are forecasting the EUR/GBP exchange rate to reach parity by the end of 2017.

If you are unable to accept such a low exchange rate for GBP into EUR international payments in 2017 we suggest you book in current rates. Likewise, if you want to take advantage of a stronger Euro we suggest you set an order for better rates.

DNB:

The GBP to EUR exchange rate has not finished its decline nor has the Bank of England finished cutting interest rates say analysts at DNB Markets.

Sterling has not closed below €1.1520 in 2016 - but fresh analysis on the GBP/EUR's outlook suggests such an event is highly likely.

UBS:

Analyst John Wraith at UBS is a noted Sterling bear and has for some time now maintained the view that the Euro and Pound were on track to equalise.

Wraith notes that when the global financial crisis entered its acute phase, Sterling resumed its rapid decline, falling a further 20% by the end of 2008.

“Although different in its underlying causes, a similar pattern of decline, pause, and fresh falls may be unfolding now,” says Wraith.

The focus on the parity call for EUR/GBP has always been the UK's large currenct account deficit; the result of the country's reliance on imports over exports combined with the country being a net debtor to the rest of the world.

Geoffreys:

What an absolute load of rubbish.

[PhotoLady]

Even so, I couldn't help but raise a titter at Devil's slant on the quotations

[Devil]

Come on people, it is all speculation and the bottom line is nobody knows, we are in unknown territory, and I think the Deutsch Bank has a vested interest in talking down the pound, prompted no doubt by the German Government. So whilst some may wish to sit by the guillatine and knit red hats.....is it still not time to get behind the UK, because we are leaving the EU, The EU are going to fight dirty because they are afraid of the consequences of Brexit.

And I suppose the German Government has also persuaded JP Morgan, BNP Paribas, Crédit Suisse, HSBC, UBS and DNB to say ± the same thing? They must be even more powerful than I thought.

I agree that it is to some extent speculation, but an educated speculation is often the way forward. When competitive banks concur, it may be better to take note.

[Firefly]

Dev

No, the German Government has just been handing out crystal balls.

Jackie

[geoffreys]

JP Morgan:

Pound Sterling
“We still expect GBP to remain weak on hard Brexit uncertainty, but forecasts were tweaked 2.3% higher in 1H and 1.1% in 2H (to range around 1.2 for most of the year but rise to 1.25 in 4Q).

If we are wrong and the economy remains resilient through the summer, we will need to review the extent of GBP weakness, and indeed it is not inconceivable GBP could appreciate for a time if the BoE does indeed hike.

BNP Paribas:

GBP:
The GBP will remain in focus heading into the ruling on Brexit from the Supreme Court, expected on Monday. The government is generally not expected to win this appeal, but we think the significance of this ruling has diminished since last month’s parliamentary resolution supporting the Q1 timeline for Article 50.

We continue to believe the GBP is trading near levels reflecting a worst-case scenario for trade and capital flows, and therefore expect long-term-oriented investors to be buyers below GBPUSD 1.20.

Crédit Suisse:

The Pound:
“While it's true that leaving the single market comes under the banner of a hard outcome, it's also the case that the promise of parliamentary votes and transitional deals can be taken as silver linings by those hoping for a more measured and less confrontational end outcome with relatively low market and economic volatility."

HSBC:

Pound Sterling will resume its slide against the Euro in 2017 say forecasters at HSBC.

Germany and Spain are tipped to lead a continued Eurozone recovery whilst Sterling is undermined by the triggering of article 50 and Brexit uncertainties finally become manifest.

As such, HSBC are forecasting the EUR/GBP exchange rate to reach parity by the end of 2017.

If you are unable to accept such a low exchange rate for GBP into EUR international payments in 2017 we suggest you book in current rates. Likewise, if you want to take advantage of a stronger Euro we suggest you set an order for better rates.

DNB:

The GBP to EUR exchange rate has not finished its decline nor has the Bank of England finished cutting interest rates say analysts at DNB Markets.

Sterling has not closed below €1.1520 in 2016 - but fresh analysis on the GBP/EUR's outlook suggests such an event is highly likely.

UBS:

Analyst John Wraith at UBS is a noted Sterling bear and has for some time now maintained the view that the Euro and Pound were on track to equalise.

Wraith notes that when the global financial crisis entered its acute phase, Sterling resumed its rapid decline, falling a further 20% by the end of 2008.

“Although different in its underlying causes, a similar pattern of decline, pause, and fresh falls may be unfolding now,” says Wraith.

The focus on the parity call for EUR/GBP has always been the UK's large currenct account deficit; the result of the country's reliance on imports over exports combined with the country being a net debtor to the rest of the world.

Geoffreys:

What an absolute load of rubbish.

All those disagreeing with my chums in the City of London.
We will have to wait see when Article 50 is activated, if the House of Lords allows it to be!
Geoff.

[Dominic]

How many of these banks got into trouble for manipulating the exchange rates?

They are about as reliable as the opinion polls, yet like the opinion polls we still listen to them, despite all the evidence to the contrary.

[cyprusgrump]

How many of these banks got into trouble for manipulating the exchange rates?

They are about as reliable as the opinion polls, yet like the opinion polls we still listen to them, despite all the evidence to the contrary.

Indeed...

And how many of these financial 'experts' saw the 2008 crash coming and prepared accordingly...?

[ApusApus]

How many of these banks got into trouble for manipulating the exchange rates?

They are about as reliable as the opinion polls, yet like the opinion polls we still listen to them, despite all the evidence to the contrary.

Indeed...

And how many of these financial 'experts' saw the 2008 crash coming and prepared accordingly...?

I agree, we have all these highly paid "economists" who have no idea what is going to happen tomorrow let alone in the next few years! Bit like weather forecasting really


Shane

[Jimgward]

Methinks Devil's quotations are,worth more than Geoffrey (I've a million Cypriot friends in the city of London) but I'll throw in my hard and fast put down....

[Firefly]

Only a million ?

[geoffreys]

Only a million ?

Geoff.

[cyprusgrump]

On ITV News at Ten last night, Vauxhall Motors was cited as likely to be the first major manufacturer to fail as a consequence of Brexit. Two reasons were given: one is that the French (who are likely to buy the company) will want to move the manufacturing over to France (so that the company remains within the EU trading area) but also as a consequence of the pound's depreciation, which results in the company losing money on each car it sells.

But as you keep insisting, we haven't left yet so this cannot possibly be a result of the Brexit vote!

As for the exchange rate, it is currently £1= €1.17 which means they must have been losing money on every car they sold between 2008 and the end of 2011...?

Unless they sold (or sell ) any cars in the UK of course...?

[rogertcb]

Unfortunately I think Vauxhall will be the first of many companies moving out of the UK as brexit takes effect I really feel sorry for all those people who thought it would be in the national interest to leave the EU for whatever reason they had which although a remain supporter myself I am prepared to do anything I can to help the UK to be 'great again' if only to go back as it was in the 60s and 70s when we could only envy the Germans driving in their BMWs and Mercedes. What I feel sorry for mostly with brexit is our kids and grandkids who will have to get used to driving the austin maestro and allegro economy of the future. Roger

[Dominic]

But as you keep insisting, we haven't left yet so this cannot possibly be a result of the Brexit vote!

And denial is a river in Egypt.

[Cogs123]

[cyprusgrump]

But as you keep insisting, we haven't left yet so this cannot possibly be a result of the Brexit vote!

And denial is a river in Egypt.

I was being slightly facetious but facts are facts and there is truth in it...

Clearly GM is not selling Vauxhall Opel because it is making vast amounts of profit. So we can assume that it is losing money on its operations in Europe or at least breaking even... This isn't a situation which suddenly started on June 24th 2016.

Therefore it is nothing to do with Brexit. Sure, the exchange rate has changed since June but not outside of the range in recent history and the exchange rate will clearly not affect operations in Germany.

Anybody that buys the company will not do so in order to continue to make losses. They will want to consolidate the business where they can be most profitable. If that means closing the Vaxuhall plant and moving production to somewhere cheaper (Poland or Turkey for instance) that will be their decision.

But it has nothing to do with Brexit.

You could just as easily blame GM's problems on the state of the Eurozone causing decreased demand across the continent or the national Living Wage in the UK making employing car workers there too expensive...

[geoffreys]

"But it has nothing to do with Brexit! (Quote Cyprus Grump).
Indeed it has not!
Another red herring from the remoaners....
Geoff
Moderate Political Poster.

[cyprusgrump]

CG and others, we all know Brexit has not yet taken place per se, but global industrialists do look a bit further than the end of their noses and make decisions accordingly.

So already we are seeing decisions being made in the light of the UK's imminent departure from the EU. Not too hard to figure!

And frankly I'd rather take note of a well regarded industrial reporter from ITV (note not the BBC) with no axe to grind, than some of the fanciful thinkers on this forum who believe that post-Brexit the UK will be delivered unto a land of milk and honey.

So ITV is unbiased is it...?

Are GM selling the German operations too...?

I must say, that Gexit had completely slipped past me...