BMO Capital’s Gallo Sees Pound at 1.20 in Next 3 to 6 Months

BMO Capital’s Gallo Sees Pound at 1.20 in Next 3 to 6 Months



we see Steven the pound dropping to 123 how how much lower do you expect it could go so we've been calling sterling dollar a cable that is lower for a considerable period of time we've been warning about the risks of No Deal brexit or some type of messy political scenario in the UK involving perhaps snap elections that would sink the pound and that's indeed what we've been seeing I have to say our three to six-month call is 120 and and given where we're trading now in cable that doesn't sound exceedingly bold but what I would say at the for the time being is that there are downside risks to that call of 120 in sort of three to six month window look it it's now virtually impossible I think for the withdrawal agreement as it currently stands to be renegotiated between the EU and the UK government and even if that were possible to get it through and ratified into into UK law so that means that we're either going to have on October 31st a No Deal brexit or there'll be an extension but if we have extensions Boris Johnson will almost have to have to certainly call elections and go back to the people all the third option is that I guess you might say the EU blinks and we haven't negotiated No Deal breaks it with bridging arrangements while the boat while the two sides conduct a free trade agreement talk now that third scenario to me is probably the most intriguing because I think what it would require on the EU part is to demonstrate logic and to demonstrate a degree of you know attention to commercial interests rather than just pure politics and that really is not in the DNA of those that are in Brussels and one of the greatest proofs of this is the euro zone the euro zone is probably the biggest financial and economic catastrophe in modern financial history it's right up there with subprime the only difference is that this was a political project so the outlook for exit is not good if the outlook for going forward is not good

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