Tourist binoculars offer users the chance to pay in Pounds or Euros in the British overseas territory of Gibraltar.Reuters/Phil Noble
Sterling witnessed the largest single intraday drop against the dollar in its history the morning after Britain voted to leave the EU in June last year.
The pound continued to slide for several months afterwards, with wild swings in value, a flash crash, and moves driven by political developments.
The pound has now started to behave a little more like a normal, cyclical currency, moving on data events and Bank of England announcements.
But as Brexit negotiations progress (or don’t), sterling’s movements are likely to once again be driven by politics rather than economics.
Britain’s tone in Brexit negotiations has softened substantially in recent months, with Theresa May’s Florence speech greeted positively on the continent for its more conciliatory tone.
A soft Brexit — where Britain retains close ties to Europe after Brexit — remains unlikely but it is now more possible than at virtually any other point since the referendum. The prime minister is “leaning” towards an arrangement with the EU that includes deep regulatory alignment, according to Politico.
Business Insider has rounded up forecasts for what will happen to sterling in the event of a soft Brexit. The forecasts are all more positive than those for a harder Brexit scenario — where Britain leaves the single market and restricts immigration. Most analysts see sterling reaching levels against the dollar not seen since before the referendum if soft Brexit is achieved. The pound was trading around $1.48 on June 23, 2017, the day before the Brexit referendum.
The average price forecast soft Brexit from the five banks surveyed is $1.48 in the event of a softer Brexit. That compares to Thursday’s price of $1.31 — implying a 13% rise. Check out five forecasts below:
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