The British beating is set for some major volatility at the start of next year due to ongoing Brexit talks, one currency expert told CNBC Tuesday.
The currency could see its value plummet by as much as 10 percent if the U.K. does not reach an agreement with the European Fellowship over its future trading arrangements, Thanos Vamvakidis, head of G-10 unknown exchange strategy at Bank of America Merrill Lynch, told CNBC’s “Yell Box Europe.”
“If we don’t get a deal, sterling can be weaker by about 10 percent, (or) fair and square lower. If you get a deal, any deal, …. (sterling) can be up by 10 percent. I don’t over recall any other currency can have this kind of moves in the next few months,” Vamvakidis totaled.
Brexit has been a key factor moving sterling since the referendum endorse took place in June 2016. The currency is down about 13 percent since then. On Monday, the produce fell to an 11-month low against the dollar to $1.2920 amid growing things over Brexit and the risk that there won’t be a deal. The U.K.’s Trade Secretary Liam Fox divulged Monday that the European Union is stubborn, and the chances of a no-deal attitude at 60 percent. At the same time, trade tensions supported the greenback, which also bestowed to the 11-month low.
Brexit negotiating teams want to reach a deal beyond their future relationship by October to allow enough time for agree to from parliamentary procedures. However, the biggest sticking points in the covenants still remain ahead of a legal deadline – March 29, 2019 — for the U.K.’s departure. There’s appease no consensus over the Irish border issue as well as future customers arrangements.
“By early next year either we are going to have a engage in and sterling is going way up or we don’t, and sterling is going way down,” Vamvakidis said, continuing that “sterling might be the most interesting currency to trade in the next few months.”