Deutsche Bank brand the pound ‘irrelevant’ in the wake of Brexit
Deutsche Bank has taken another swipe at sterling and in a shocking move has branded the pound ‘irrelevant’. The German financial giant is the largest lender in Germany, and has been consistently beleaguering the pound in the wake of last June’s Brexit vote, which saw Britain choose to break from the European Union (EU).
Deutsche Bank have been consistently dismissive of the pound’s value, however they have taken this vocal campaign to new heights in what can only be described as a doom-mongering message issued to their top investors.
Brexit Triggered GBP ‘Crisis’
According to Deutsche Bank’s strategists for foreign exchange, in the aftermath of June’s shock vote, sterling has been in crisis, and appears to have been permanently tarred by the decision to leave the EU.
The result of this, according to the German mogul, is that the pound is on course to lose its highly coveted status as one of the leading international safe haven currencies. The world has several so-called ‘reserve currencies’, including the euro, the Japanese yen, and the US dollar. Sterling currently ranks among these power currencies, but that may well be about to change if Deutsche Bank’s predictions prove to be accurate.
The report issued to star investors painted a damning picture of the diminishing role of the pound in the post-Brexit flow of international capital, and stated that its reserve status would be permanently reduced as a result.
GBP “Irrelevant”
An explicit comment from the company stated that ‘The pound may offer value but is increasingly irrelevant.’
With reserve currencies being held across the world by central banks for financial stability and trading purposes, the report further speculates that China’s movement away from the pound and into other currencies is further evidence of the increasing irrelevance of sterling as a currency.
The referendum in June resulted in a considerable sell-off for the pound, which caused it to slip by about 20 per cent compared to the US dollar. It has recovered to some extent as Prime Minister Theresa May has outlined her Brexit plans, but its status still remains uncertain.
While the continuing economic strength of Britain in the wake of the decision to leave the EU has helped bolster the pound, it remains about 12 per cent down relative to the dollar, in comparison to this time in 2016.
It remains to be seen if the situation is as dire as Deutsche Bank’s predictions suggest, but their attitude is indicative of at least some international opinion, which does not bode well for sterling.