Earlier this year, FXB hit an all-time low as speculation intensified that Great Britain’s departure from the European Union is a real possibility. Market observers almost universally believe such an event would be pound negative. Moody’s has warned that it could downgrade U.K.’s credit rating if the country leaves the union. Some well-known asset managers and banks are chiming in, confirming that the pound and British stocks could suffer in the wake of a “Brexit.”
“The BOE had decided to keep rates steady in a unanimous vote, but the central bank also recently slashed its growth forecast for the second quarter. The latest inflation report also indicated that economic growth would increase in the second half of the year. The BOE is targeting 0.9% inflation for the year, which gives the bank plenty of wiggle room to stimulate the economy. Economic data has been fairly soft of late, which could lead to further action from the BOE down the road. This, coupled with the Brexit fears, suggests that the danger to the Pound seems to be to the downside,” according to OptionsExpress.
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