Brexit could trigger British currency crisis
The world’s largest fund manager, BlackRock Inc states that Great Britain could stumble on a though pound crisis if the United Kingdom decides to break up with the European Union.
BlackRock Inc has already concluded that its worst scenario suggests the pound’s weakness, a steep suspend of capital inflows, not to mention a painful deterioration in market confidence.
It would be very hard to get out of the situation with the rapidly slumping pound. During this undesired pound crisis, the Bank of England would have to increase interest rates, notwithstanding the weakening economy.
The chief investment strategist of BlackRock’s Investment Institute, Ewen Cameron Watt, told that a serious outcome would be Tuesday’s sterling falling from $1.395 to around $1.20. By the way, that wasn’t the most probable outcome of the so-called “Brexit,” though a more realistic scenario would result in a considerable further slump in the major British currency. This choking uncertainty between the present moment and the decisive day of June 23 makes the pound’s fall more probable before polling starts. By the way, this year the British pound has already dropped more than 5% against the euro and the greenback.