Deutsche Forecasts Further Drop In Pound Due To Brexit

Deutsche BankDeutsche Bank which is a leading financial institution in the banking sector has predicted that British Pound is likely to hit parity with currencies like Euro and US Dollars because of Brexit. The bank in a special report on Brexit has made a statement where Pound will experience a drop of 15 percent as compared to the two currencies as mentioned above.

As per Deutsche Bank, the current value of Pound is not reflecting the consequence of a hard Brexit. The bank believes that Pound will be able to reach $1.06 against US Dollars by existing current account deficit of the United Kingdom and slow growth along with the complicated negotiations predicted for the Brexit.

The British Government has declared that on 29th March 2017, it will trigger the Article 50 of the European Treaty that commences the 2-year process for the separation from the European Union. Theresa May the British Prime Minister has made a statement that their government is in favour of a hard Brexit exit. It means that the companies might have to lose the passports access to the single market of European Union.

RT UK

Some economists are optimistic about the near-term prospects of UK Pound, but none of them believes that the currency will be able to return to its pre-referendum pricing shortly. A poll was conducted among research firms and 60 banks where it was found that the currency will be at $1.23 against US Dollars by the middle of this current year. However, Pound will drop to $1.21 in the next half of the year. At the moment, the UK Pound is trading at $1.25 against US Dollars.

In spite of the gloomy outlook of Pound, Deutsche Bank is looking forward to building its new headquarters in London and is committed to remaining in that city. Garth Ritchie who is the United Kingdom’s head of this bank has made the following statement:

The move underlines the bank’s commitment to the City of London and the importance it attaches to being an employer of choice in the capital. It will advance the bank’s strategic goals.

It is said that the new headquarter of this Germany’s largest bank will be on lease for 25 years which means that the bank will be in the market until the end of 2048. There are approximately 7000 people employed in the UK by the bank. Brexit’s supporters noted that project indicated panic and fear amongst the financial institutions thereby leaving the United Kingdom due to Brexit was overhyped.

In a report last week it was stated that Goldman Sachs would be moving hundreds of different positions out of London before the Brexit pact is signed. Similarly, another commercial bank HSBC also said that it would shift 1000 jobs out of the country to France while JP Morgan will shift 4000 of its 16000 UK roles.

Steven Rudford

Steven Rudford

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