The recent swings in sterling triggered by shifts in sentiment towards the chances of a Brexit deal have left little room for the pound to appreciate if there’s a deal, but plenty of room for it to depreciate if there’s a no deal. As the markets appear to have largely priced in a Brexit deal, such a result by 31st December 2020 would be unlikely to push the pound much above the current levels of $1.35 and €1.13. But as a no deal would come as something of a shock to the markets, there is more scope for it to fall sharply. The weakening in the US dollar in recent months suggests that if there is a “cooperative” no deal, the pound may not fall quite as far as our forecast of $1.15. But at this stage, the risks are firmly tilted towards the downside.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services