Best Exchange Rates

Home pages - full list (A-Z)


Pound to Rebound Higher in 2019, Says SEB; No-Deal Brexit Unlikely

2019 will be a good one for the British pound, thinks a foreign exchange analyst at SEB. Recent depreciation is overdone, the analyst says, and will be corrected once markets begin to price in the improbability of a no-deal Brexit. Investors should expect a GBP/EUR rally into the mid-€1.17s or higher.

Currency-News AUD EUR GBP USD
Email share     Facebook     LinkedIn    Twitter

The British pound has been the second-best performing major currency over the Christmas period. Relative to the US dollar, sterling is showing a gain since the week ending December-14 of 1.7 percent and, at $1.28, is now at a 3-1/2-week high.

Much has been said in the media about delays to the “meaningful vote” on Prime Minister May’s withdrawal agreement and what it means for no-deal probabilities should the agreement be rejected by the House of Commons, and about no-deal impacts on the British currency. To state the obvious, nearly all of those media releases and economic analyses have worked to ramp up negativity on the pound, and this is reflected in current exchange rates. Against the dollar, for example, sterling is worth 11 percent less than it was in April.

The market is, though, far too downbeat, according to analysts at Swedish bank SEB, who join a growing collective of experts believing in the improbability of a no-deal Brexit. As a result of negativity, sterling is significantly undervalued.

“We don’t expect a hard Brexit,” says SEB’s Richard Falkenhäll.

“Tory hardliner Brexiters will at some point realise [May’s] deal might be the only way forward.

GBP to EUR - 1 Week chart - Latest
GBP/EUR - 1 Week Chart - Latest

“Parliament will have to make a decision to stop a no-deal withdrawal before March-29. All other outcomes other than [no-deal] will likely strengthen GBP from its current level.”

To agree to May’s deal would be to walk sterling away from the proverbial cliff edge, says Falkenhäll, and would lead to “a significant recovery.”

Even if the withdrawal agreement is rejected by British MPs, there remains the option to push back the exit date beyond March to allow for further negotiations, or to hold a second referendum, both of which would increase the likelihood of the UK remaining in the EU—undoubtedly the best-case scenario for UK markets, and one that might add 15 percent to sterling’s value within a short period of time.

With all that said, SEB expects significant sterling appreciation in 2019, with a target for GBP/EUR—economically the most important pound exchange rate—of €1.1765 (EUR/GBP £0.85) based on the current withdrawal agreement being passed. Should Brexit be cancelled, however, considerably more upside is likely.

Though SEB declined from offering a GBP/USD forecast, under its assumptions a 2019 rally into $1.37-$1.40 territory seems reasonable.


Further Reading


TransferWise Borderless Account – BER Review

TransferWise’s Borderless Account allows users to hold and convert funds in 40 different currencies, and send and spend internationally, all at the “real” exchange rate and with the low fees that TransferWise is renowned for. Users can also receive major-currency payments free of charge.

Updated: 20 Mar, 2019

CBOE Ditches Bitcoin Futures Amid Reduced Interest

Amid declining interest, the Chicago Board Options Exchange, or CBOE, has announced it will no longer offer bitcoin futures contracts once current contracts expire in June.

Updated: 19 Mar, 2019

Canadian Dollar to Lose a Further 5 Percent, Will Soon Buy Only US$0.71 (TD Securities)

Prospects for the Canadian dollar have turned “considerably to the downside” and the currency is likely to lose 5 percent of its value this year, TD Securities has said.

Updated: 19 Mar, 2019

Australian Dollar Still Struggling; AUD/GBP at Lowest Since 2016

A slight advance in AUD/USD this week to $0.705 is hardly cause for celebration; however, the stability this represents following 3 weeks of losses would normally signify reduced currency pessimism—in this case, it doesn’t even do that.

Updated: 19 Mar, 2019

Pound Falls From 21-Month High After Doubts Cast on May’s “Legally Binding” Assurances

GBP British Pound Sterling Exchange Rate Forecast Brexit

The pound fell rapidly away from long-term highs on Tuesday morning after Britain’s Attorney General said that the “legally binding” assurances secured on Monday night by Theresa May merely “reduced the risk” of the UK being trapped in a permanent backstop.

Updated: 19 Mar, 2019


Tags: Currency-News , , , ,

Please note that the opinions of our authors are their own and do not reflect the opinion of Best Exchange Rates and should not be taken as a reference to buy or sell any financial product. Full Disclaimer

Get a Better FX Deal when you Send and Spend Abroad.


Do NOT follow this link or you will be banned from the site!