British Pound to Dollar Rate @ 1.15 in Brexit Worst-Case-Scenario say Morgan Stanley
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The pound to dollar exchange rate is forecast to fall into the 1.20s by 2017 on a combination of a UK's economic slowdown and repatriation of capital into the US.
65% chance UK votes to stay in the European Union say Morgan Stanley
Worst case scenario forecast is GBP to USD at 1.15 in 2017
But, pound to fall to 1.25 even in the event of an 'In' vote at referendum
The dollar's super-cycle not yet complete
The pound sterling will fall notably against the US dollar over coming months, regardless of the outcome of the UK's EU referendum argue analysts at US investment bank Morgan Stanley.
The declines in the event of an 'Out' vote will be substantial argue analysts, but an 'In' vote will be unable to save sterling from a slowing UK economy and the extension of the US dollar's super-cycle higher.
Declines could only stop at around 1.25 in 2017 show forecasts from Morgan Stanley, released in their Spring Global FX Outlook paper.
A key question being asked by those with an interest in sterling is just how low sterling can go on an 'Out' vote?
The base-case forecast held by Morgan Stanley is for the sterling to dollar rate to trade at 1.45 by the time of the June referendum and close the year at 1.32.
The base-case scenario does not anticipate the UK voting to leave Europe though with a 65% chance given to an 'In' vote prevailing.
But, “should the UK vote for Brexit on June 23, we estimate GBP/USD could fall as low as 1.20, taking EUR with it,” say Morgan Stanley in a note to clients.
The exchange rate would head as low as 1.15 by the end of 2017 on the event of Brexit; this representing sterling's 'worst case scenario' outcome on a Brexit vote.
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