LONDON (Reuters) – Deutsche Bank said it will take profit from its recent recommendation to sell the euro and buy sterling, turning neutral on the British currency following the parliamentary vote on its divorce from the European Union overnight.
The pound fell sharply overnight amid fresh concerns about the possibility of a “no-deal” after lawmakers voted against an amendment aimed at preventing a chaotic departure from the bloc. Last week, it hit its highest since October.
In a note to clients following last night’s voting, Deutsche Bank strategist Oliver Harvey said now’s the time to lock in profits from the recent run-up.
It is more likely the clock runs down to the March 29 deadline, with lawmakers forced into approving Prime Minister Theresa May’s deal under the threat of a crash no-deal Brexit, he said.
“As well as increasing the risk of a crash Brexit by accident, it should not be positive for economic confidence which (…) is already deteriorating due to political uncertainty,” he said.
“We consequently take profit from our short EUR/GBP recommendation from two weeks ago and turn neutral on sterling.”
(Reporting by Josephine Mason, Editing by Helen Reid)