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Could No Deal Brexit Bring more Pounds for your Bucks?

Notes from Morgan Stanley suggest GBP and USD could slide to parity if No Deal Brexit takes place

Published on July 18, 2019

Widely reported notes from international bank Morgan Stanley have suggested that a No Deal Brexit could see the value of the pound near parity with the US dollar.

The news, highlighted by media including Bloomberg, quote a Morgan Stanley report which suggests "The pound has come under intense selling pressure since Prime Minister May withdrew from her party leadership position, leaving markets with increased concern that the UK may be heading towards a harder Brexit ... Should this scenario materialize, pound-dollar could fall into the $1.00-$1.10 range."

Such a fall in the pound, a 19% drop, would compare with the 25% drop in the value of the pound on September 16, 1992, 'Black Wednesday', when the UK withdrew from the European Exchange Rate Mechanism (ERM).

If a No Deal Brexit occurs, and the pound sees near parity with the dollar, recent trends indicating a growth in American investment in the UK could continue. As we've recently reported, trends have emerged revealing a growth in Americans shopping in the UK, record levels of UK exports to the US as well as increased investment in UK property from American buyers.

If suggestions of parity continue to develop, the economic strength of the Special Relationship looks like it could only strengthen further.

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