Sterling shorts could see sharp unwinding on Brexit day

As the start of the negotiation process between the UK and EU approaches, an already weak sterling faces more tests

"We still see potential for further sterling weakness in the near term and after the triggering of Article 50" – Mikael Olai Milhøj

Sterling could see a sharp unwinding in short positions and a temporary spike on March 29, when Prime Minister Theresa May is set to formally initiate the UK’s exit from the European Union, even though the pound’s medium-term prospects remain gloomy, strategists say.

While analysts point to persistent downside risks for the currency, they do not expect a huge move lower when the UK formally triggers Article 50, as market participants have already priced negatives into the pound.

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