On top of a sharp UK recession this year, Brexit related uncertainty could provide additional concerns for GBP investors, according to economists at Rabobank.
“Uncertainty connected with the ‘will-they, won’t-they’ nature of post-Brexit-relationship discussions threatens to weigh on investment and on GBP in the coming months.”
“Insofar as the UK runs a sizable current account deficit, it is useful to view the outlook for GBP through the eyes of an inward investor. Brexit uncertainty adds an additional layer to the economic calamity faced by the UK’s peers.”
“Given concerns that the future arrangements between the UK and the EU may not be resolved by June, we expect GBP to be under pressure. We see EUR/GBP at 0.88 on a 1 to 3-month view with upside risk.”