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Brexit “no deal” could collapse the pound to $ 1

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UK Pound slides as UK warns Brexit talks could collapse Description video: Yahoo Finance’s Tom Belger discusses the tenuous Brexit negotiations.\n#Brexit #EuropeanUnion #UK\n\nFor 2020 election results please visit:\nElection results: https://www.yahoo.com/elections\n\nSubscribe to Yahoo Finance: https://yhoo.it/2fGu5Bb\n\nAbout Yahoo Finance: \nAt Yahoo Finance, you […]

UK Pound slides as UK warns Brexit talks could collapse

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Brexit “no deal” could collapse the pound to $ 1

Future British Prime Minister Boris Johnson said the United Kingdom should leave the European Union by October 31, with or without an agreement. According to official forecasts, “no deal” Brexit will provoke a recession and lead to a fall in the national currency. Some experts fear that the pound and the dollar may reach parity.

Analysts warn that a sharp decline in the value of the pound could lead to a sharp rise in inflation and harm consumers. While it may help exporters, a currency crash will scare off foreign investors and make life harder for UK companies that have to make payments in dollars..

The pound is trading below $ 1.25 right now. Before the 2016 Brexit vote, it was nearly $ 1.50.

«The risk that the UK will be left without a deal grows day by day», – said John Reith, head of UK betting strategy at UBS. «It is a magnet attracting sterling lower and lower, simply because time is shortening».

Wraith believes that the most likely outcome is still that the UK is entering into an agreement to leave the European Union, which softens the impact on trade. But the depreciation of the pound to parity with the dollar by 20% «definitely unthinkable», he continued.

Morgan Stanley analysts agree. In a recent note, they said the pound could fall to between $ 1.00 and $ 1.10 if Britain leaves the European Union without a deal. Even if Johnson takes a tough line in negotiations with Europe, sterling could trade between $ 1.10 and $ 1.20, they added..

The lowest level the pound has ever reached was $ 1.05 in 1985, when the dollar jumped during the Reagan administration. That same year, the United States, Britain, Germany, France, and Japan signed an agreement known as the Plaza Accord to contain the dollar..

Brexit 'no deal' could collapse the pound to $ 1