The pound continues rising on the reports of ongoing Brexit negotiations. Can this continue?
Here is their view, courtesy of eFXdata:
Bank of America Merrill Lynch Research discusses GBP outlook and thinks that sterling is the G10 currency with the most potential to move in the months ahead, as the Brexit deadline is approaching.
“To exit the EU with a deal on March, the UK needs the deal before the end of the year, or very early next year.
In a scenario analysis, we argued that Cable would be at 1.10 without a deal, 1.35 with a deal similar to the current May proposal, and 1.50 if somehow the UK decides against exiting. No other G10 currency can move by as much based on all known unknowns so far,” BofAML argues.
BofAML bias remains for a favorable outcome to the negotiations which paves the way for a sustained move higher in GBP.
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