Will pound equate to dollar?

The British pound will most likely fall to parity with the dollar in a no-deal Brexit, said Lord Kerslake, the former chairman of the British civil service. Due to the sharp decline in recent months, the currency is now the worst performing of all currencies in the world.

According to Kerslake, in the event of a no-deal Brexit, the currency could be worth $1 for the first time in history. “It is quite possible that the currency will continue to fall in the coming months, for example because the new British Prime Minister Boris Johnson has repeatedly said that the United Kingdom will leave the European Union on Thursday, October 31, with or without a deal."

Johnson's comments have already caused the British pound to fall more than 3% against the dollar in the past 7 months. In fact, the British currency is currently performing the worst of all currencies in the world.

Unexpected news
On Friday 9 August it was also announced that the British economy unexpectedly decreased in the second quarter 0,2% has fallen. This is the first quarterly decline since 2012. According to Kerslake, the Bank of England should consider raising interest rates in the event of a no-deal Brexit, in order to avoid a flight of the pound. "However, this would push consumer prices, inflation and mortgage rates soaring," he said in a statement.

Several other asset managers also predict that the currency could fall to parity with the dollar (a level of $1) if a no-deal Brexit becomes a reality.

Kimberly Baker

Kimberly Bakker is an all-round editor at Boerenbusiness. She also has an eye for the social media channels of Boerenbusiness.

k.baker @boerenbusiness. Nl

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