Sterling's recent slide is not yet over as the chances Britain and the Euro...
LONDON - Sterling’s recent slide is not yet over as the chances Britain and the European Union part ways without a withdrawal deal have jumped again after arch-Brexiteer Boris Johnson took over as prime minister last month, a Reuters poll found.
“Fears of a no deal Brexit are likely to worsen, though we anticipate it will be avoided. Our official house view is that there will be a delay, but kicking the can down the road doesn’t ease uncertainty,” said Jane Foley, head of FX strategy at Rabobank and the most accurate forecaster for major currencies in Reuters FX polls last year.The median forecast for a disorderly Brexit - whereby no deal is agreed - jumped in an Aug.
But as they have since late 2016 when Reuters first started asking about the most likely eventual outcome, a strong majority of economists polled still think the two sides will eventually settle on a free-trade deal. With a deal expected, median forecasts in the wider poll of over 50 forex market watchers gave a healthier outlook for sterling and it was expected to have rallied to $1.27 in six months and then be trading 10% higher at $1.33 in a year.
However the country will probably dodge a recession - the median likelihood of one within a year was put at 35% and at 40% for one in two years, up five percentage points each from last month. At its policy meeting last week the Bank lowered its growth forecasts due to increased Brexit worries and a slowing global economy, but stopped short of following other central banks and considering an interest rate cut.
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