According to a Reuters poll of foreign exchange strategists, the pound could drop around 9% against its American peer to test the 1.2000 level should the UK leave the European Union (EU) without a deal.
“However, most economists expect the two sides to eventually agree a free trade deal, and medians in the Feb 28-March 5 poll of over 60 strategists said cable would be at $1.32 at the end of March as the divorce is due to take effect – close to the $1.314 it was hovering around on Wednesday.
In six months’ time the pound will have strengthened to $1.35 and in a year to $1.39, the poll found, little changed from a February poll and still significantly below levels it was trading at before the June 2016 referendum vote to leave the bloc.
A separate Reuters poll of economists on Wednesday showed the chance of a no-deal Brexit had fallen to 15 percent, but if the two sides do part ways without agreement, one forecaster predicted sterling could sink as low as parity to the dollar.
While no other respondents were that gloomy, even the most optimistic forecast for no-deal cable was a drop to $1.28.”