IPE: Dollar/sterling: The road ahead for cable

The nature of any trade deal between the UK and the EU is expected to be the main driving factor in the price of sterling. Brexiteers have long advocated a trade partnership with the US, however this would require significant US/UK growth to compensate for the impact of the changing UK/EU trade landscape. A critical determinant of this growth will be the dollar/sterling relationship. Andrew Bloomfield, Associate Director of Research at Record Currency Management, commented that, despite pre-election expectations of a hung parliament, the realisation dawned post-election that a Conservative majority could be used to stare down the European Commission, thus increasing the risk of a hard Brexit. The expectation in 2020 is that the dollar/sterling relationship will continue to be driven by key events, and this will have implications for the hedging decisions of UK pension funds in particular.

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