GBP is Due for Volatility as Brexit Negotiations Enter Final Stretch Next Year

The British pound is set for some major volatility at the start of next year due to ongoing Brexit negotiations, one currency expert told CNBC Tuesday.

The currency could see its value drop by as much as 10 percent if the U.K. does not reach an agreement with the European Union over its future trading arrangements, Thanos Vamvakidis, head of G-10 foreign exchange strategy at Bank of America Merrill Lynch, told CNBC’s “Squawk Box Europe.”

“If we don’t get a deal, sterling can be weaker by about 10 percent, (or) even lower. If you get a deal, any deal, …. (sterling) can be up by 10 percent. I don’t think any other currency can have this kind of moves in the next few months,” Vamvakidis added.

Brexit has been a key factor moving sterling since the referendum vote took place in June 2016. The currency is down about 13 percent since then. On Monday, the pound fell to an 11-month low against the dollar to $1.2920 amid growing concerns over Brexit and the risk that there won’t be a deal. The U.K.’s Trade Secretary Liam Fox said Monday that the European Union is stubborn, and the chances of a no-deal stand at 60 percent. At the same time, trade tensions supported the greenback, which also contributed to the 11-month low.

via CNBC

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.