Tuesday , September 17 2019

Brexit-hit pound looks like EM currency: BOE

Bloomberg

Pound volatility is at emerging-market (EM) levels and UK assets are set for a substantial repricing once the Brexit outcome becomes known, according to Bank of England (BOE) Governor Mark Carney.
Carney made the comparison, which echoes a long-standing quip on trading desks, at an event at the Council on Foreign Relations in New York. When asked to comment on the current level of the pound, the governor initially dodged the question, before highlighting the heightened level of volatility of UK assets.
“Sterling volatility, as you would know, is at emerging market levels and has decoupled from other advanced economy pairs for obvious reasons,” Carney said.
“A variety of other indicators show financial markets are going to move substantially in one way or another depending on the outcome of” Brexit.
The UK currency has seen some extreme highs and lows over the past few months as the endgame approaches, rallying to $1.32 in May before plunging below $1.20 earlier this month. The turmoil even raised sterling volatility above that of the Turkish lira earlier this year.
The currency has fallen close to 20 percent since the 2016 referendum.

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