Brian Martin, Senior International Economist at ANZ, suggests that they do not forecast that sterling will recover all of its decline as considerable political uncertainty will remain, but a deal would reduce current economic uncertainty and allow GBP to rise 5-7% in coming months.
Key Quotes
“Since the Brexit referendum, the correlation between the twin budget and the UK’s effective exchange rate has weakened dramatically to -0.06.”
“If an agreement is reached, a considerable proportion of sterling’s discount can unwind.”