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Brexit Pounds US dollar Euro exchange
AP Photo/Matt Dunham
Moving target.
POUNDED

The pound sterling has even further to fall

Joon Ian Wong
By Joon Ian Wong

Technology Reporter

The British pound sterling has taken a beating and it could get worse.

It has settled at about 8.5% down against the US dollar, trading at about $1.36. It’s of course impossible to know the exact trajectory of exchange rates—many have lost fortunes trying. But there’s some consensus among analysts that Brexit uncertainty could easily further weaken the pound.

Societe Generale is estimating a trading range of $1.30 to $1.35 for the pound against the dollar in the near term, dropping to as low as $1.20 in the medium term, if uncertainty drags on. “Sterling was and remains hostage to this material shock,” its Cross-Asset Research Group wrote in a note to clients this morning.

The SocGen outlook is practically rosy compared to the sub-$1.15 range that famed investor George Soros is forecasting. Before the vote he warned, without irony, of powerful speculative forces who would pounce on a miscalculation by the British government in the event of a successful “leave” vote: ”A vote for Brexit would make some people very rich – but most voters considerably poorer.”

Italian bank UniCredit is forecasting $1.25 to $1.30 to the pound in the near term. A pound that trades for under $1.20 is “certainly within the realm of possibility,” its global chief economist Erik Nielsen wrote. UBS is more sanguine, forecasting sterling trading settling around $1.35 in the absence of new catalysts.

As the results rolled in across the UK, interest in sterling rates spiked, causing popular currency-rates websites to crash under the traffic load. Xe.com was knocked offline for at least an hour as traffic surged by 10-times over its average, recording the highest amount of traffic in its 23-year history. It typically serves over 20 million unique visitors monthly.

Travel group Thomas Cook was forced to suspend its travel money website to ensure it had enough sterling reserves on hand to fulfill demand. It had failed to adjust its rates quickly enough, offering yesterday’s (June 23) rate of €1.27 to the pound even as the rate fell to €1.24, the BBC reported.

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