In a year that’s featured a global pandemic and a tidal wave of liquidity from central banks, investors are bracing themselves for a risk they’ve ignored for most of 2020: Brexit.
The prospect of the U.K. and European Union reaching a trade agreement by an October deadline is looking less likely, with Britain saying this week it’s willing to walk away and break international law in the process. That risks the pound falling to a 35-year low, stocks that lag international peers, and bond yields turning negative for the first time amid bets on Bank of England interest-rate cuts, fund managers say.
“If we have a big selloff in risk assets, and a bad Brexit outcome, then there’s no reason the pound couldn’t fall back through the March lows,” said Mike Riddell, a portfolio manager at Allianz Global Investors. That would mean a 12% slump to around $1.14, the lowest … Read More