Saturday, March 12, 2016

A potential exit of Great Britain from the European Union (Brexit) could affect the exchange rate of the sterling, according to a poll made by Bloomberg, which shows that the currency of this country could drop to 1.35 dollars or even lower, within a week from the vote to leave the EU. Such a level has never been reached since 1985. The Bloomberg analysis was conducted on a sample of 34 economists, and 29 of them anticipate the aforementioned evolution. Also, 23 of the polled economists think that the pound will not recover from the 1.35 level earlier than three months after the Brits' vote on the EU exit, scheduled for June 23rd. Seven of the polled specialists think that the British currency will drop below 1.20 dollars immediately after a vote in favor of the Brexit.   The pound has already lost over 2% in 2016, compared to the currencies of the G10 countries (the Group of the ten most developed countries in the world), as the unequal economic recovery and the increasingly weaker outlook for the hike of the policy rate join the fears of a possible exit of Great Britain from the EU. The depreciation is increasingly pronounced after prime-minister David Cameron announced on Saturday the date of the referendum and some politicians decided to launch campaigns for leaving the EU. "A Brexit vote will affect the pound sterling heavily", said Nick Kounis, head of the macroeconomic research division of "ABN Amro Bank" NV of Amsterdam.   He predicts the pound sterling going below 1.20 dollars a week after a potential vote in favor of the Brexit.  Peter Dixon, an economist with "Commerzbank" AG, the London branch, predicts that the pound sterling will fall to 1.25-1.30 dollars a week after a potential vote in favor of the Brexit.

No comments: