Deutsche Bank Warns of Sterling’s Continued Decline and Recommends Selling

Key Takeaways

  • 💰 Deutsche Bank recommends selling the British pound based on a broad, trade-weighted basis
  • 📉 Pound has been the worst-performing currency since the beginning of the year
  • 📊 Current account deficit in the UK is not improving, volatility-adjusted yield pickup at risk
  • 🔄 Pound increasingly reliant on carry inflows which are now in jeopardy
  • 💼 Deutsche Bank’s strategists have shifted stance to recommend selling pound
  • 🌍 Pound is down just over 1% on a trade-weighted basis since the start of the year
  • 💰 Sterling is experiencing further decline
  • 📉 Deutsche Bank suggests selling Sterling
  • 💰 Expectations for British pound to weaken
  • 🌍 Concerns over Brexit uncertainty
  • 📉 Sterling vulnerable to economic data shocks
  • 📊 Deutsche Bank recommends selling sterling
  • 💸 UK gilt prices have surged due to investors seeking safe haven assets in the midst of global uncertainty
  • 📉 Sterling has declined sharply, posing a challenge for policymakers as it struggles to support economic growth
  • 🏴 British government bonds are viewed as a safe investment option amidst Brexit uncertainties
  • 🤔 Diverging monetary policies between the U.S. and Eurozone are also impacting the gilt market trends

Deutsche Bank Suggests Selling British Pound Amidst Brexit Uncertainty

The British pound has faced significant challenges in recent times, with Deutsche Bank recommending selling the currency based on a broad, trade-weighted basis. The pound has been the worst-performing currency since the beginning of the year, experiencing further decline and posing a challenge for policymakers as they seek to support economic growth.

One of the key factors influencing Deutsche Bank’s recommendation is the current account deficit in the UK, which is not improving. The volatility-adjusted yield pickup is also at risk, as the pound is increasingly reliant on carry inflows that are now in jeopardy.

Brexit uncertainty remains a concern, with expectations for the British pound to weaken further. Sterling is vulnerable to economic data shocks, and concerns over the uncertainties surrounding Brexit are impacting the market.

In light of these factors, British government bonds, or UK gilts, have surged in price as investors seek safe haven assets amidst global uncertainty. The diverging monetary policies between the U.S. and Eurozone are also playing a role in shaping market trends in the gilt market.

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