Investor groups have been dumping the pound while sales of “real money” are just starting, according to data from Bank of America (BofA).
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Bloomberg report said BofA – whose recommendation is to short the currency – forecasts insurance and pension funds to scale back positions in sterling-denominated assets. The bank’s analysis shows that all client types have been cutting their pound exposure.
Quantitative strategists Myria Kyriacou and Athanasios Vamvakidis noted: “The overall GBP market position is neutral, but real money is long, suggesting downside risks as they have been selling in the last three weeks.”
With the future of both the UK and the European Union hanging in the balance – as the two negotiate before they finally go their separate ways – BofA cited a lack of investor appetite to adopt long positions. Against the euro, the pound has fallen to its lowest level in nearly eight years.
As far as the euro is concerned, the report said Morgan Stanley expects money managers to up their exposure to the shared currency amid political stability. The investment bank has said that by early 2018 a higher euro could see a one-to-one exchange rate versus the sterling.
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