The UK economy is heading for recession, according to Bank of America’s Ralf Preusser.
The GBP/USD exchange rate gapped lower on the open to Monday trade as traders return to their desks, with 30 year lows at 1.3238 to be tested over coming days.
Preusser noted: “Prolonged uncertainty could lead investors – including residential investors – to postpone decisions.
“We think a recession in the UK will ensue, which cuts our calendar year 2017 GDP growth forecast to 0.2 per cent from 2.3 per cent, even with the Bank of England (BoE) stimulating.”
Credit Suisse are in agreement with Preusser’s prognosis, adding: “While the actual path to exit is not yet clear, there are nonetheless profound implications for the UK. We expect a recession in the second half of the year and policy easing from the Bank of England.
“The domestic political turbulence may complicate the process of actually leaving the EU.”