Brexit begins, and the pound is indifferent - SocGen

Kit Juckes, Research Analyst at Societe Generale, explains that the countdown to ‘Brexit’ has begun and sterling hasn’t collapsed should come as no surprise given that the delivery of a letter to the President of the European Council came as no surprise, and nor did its contents.

Key Quotes

“CFTC data showed sterling shorts at extreme levels, and there has not been a surfeit of poor economic news to egg the bears on. The UK faces huge uncertainty, and is handicapped by real 10-year bond yields that are not just the lowest of the major index-linked markets, but 90bop lower than anyone else’s. But there’s nothing new in that. The pound is undervalued on most measures and in real effective terms it is hovering around the levels it reached in 2008, and close to the lows it saw in 1992.”