The British pound intends to end this week with the largest annual decline after the disastrous performance of Theresa May provoked a surge of uncertainty about both her future tenure as Prime Minister and Brexit’s prospects. The pound dipped Friday against the dollar 0.41% to $ 1.3064, and just this week lost 2.47%, which is the worst result for the last year, since the memorable spectacular collapse of the British currency by 4.1%.
Nomura’s strategist Bilal Hafiz writes that this dynamic was the sterling’s response to “gloomy news from the Conservative Party Congress, where Prime Minister Teresa Mei’s disastrous speech evoked concerns about her possible resignation and election of a new party leader.”
“If we see news headlines about the resignation of May, the pound will immediately be under strong pressure.” However, analysts believe that the Tories are not yet ready to expel Ms. May from Downing Street. Instead, economic issues should return to the center of attention of the markets, as well as the Bank of England’s monetary policy decision to be made next Thursday, Hafiz added.
Hans Redeker, strategist at Morgan Stanley, demonstrates a bearish currency sentiment. “After the Conservative Party’s congress is over, the pound may continue to fall, as the markets will focus on the Brexit negotiations, the state of the economy and weak indicators of the balance of Britain.”
HSBC experts in the light of the uncertainty of the pound’s prospects against the dollar said this week that they expect the pair to fall to the $ 1.26 area next year.