Hans W Redeker, a foreign exchange strategist with Morgan Grenfell, said that the pound would be coming under “profound selling pressure over the next few quarters”.
Morgan Grenfell, one of the world’s oldest merchant banks which is now owned by Deutsche Bank, has now joined with HSBC Holdings in predicting that the pound will drop below the euro in the near future.
Mr Redeker, while citing several reasons for the continued fall in value of the pound said that a key reason was the possibly of a Labour victory should a general election be called amid the current political uncertainty.
He suggested that any sort of transitional Brexit deal would immediately spark a rebellion amongst hard-core Brexiteers within the Cabinet which would very likely lead to the need to call a general election.
Getty/AFPThe possibility of a Labour victory would put pressure on the pound, according to an investment bank
The Labour Party’s agenda suggesting higher taxes on corporates and high income earners may weaken investment further, and may even lead to substantial capital outflows
Morgan Grenfell foreign exhchange strategist Hans Redeker
He said that a Labour victory “would put GBP under immediate selling pressure.”
He added: “The Labour Party’s agenda suggesting higher taxes on corporates and high income earners may weaken investment further, and may even lead to substantial capital outflows.
“Pound-denominated assets including housing may find it difficult to rally.”