Brexit Risk Has BlackRock Fund Manager Exiting All Bets on Pound

Updated on
  • Pound is trading ‘entirely outside any investment models’
  • Currency has declined versus all its G-10 peers this year

BlackRock Inc.’s Gordon Ibrahim is bailing on the pound.

The currency’s heightened volatility before Britain’s looming vote on its European Union membership means the pound is trading “entirely outside any investment models,” according to the London-based portfolio manager within BlackRock’s Model-based fixed-income business. Ibrahim, whose unit has $43 billion of assets under management, is aiming to close all sterling positions as the referendum approaches, he said.

Sterling has taken the brunt of the market’s anxiety before the June 23 vote on whether to exit the world’s largest trading bloc, sliding this year against all of its Group-of-10 counterparts. Concern leaving the EU would damage the U.K. economy has pushed gauges of anticipated sterling volatility to the highest since 2010, while Bank of England Governor Mark Carney said Thursday a vote to leave the EU could have “material effects” the currency.

“We have been dramatically reducing the risk we were taking in sterling and we continue to do that heading into the referendum as the outcome could potentially be very negative for the currency,” Ibrahim said in an interview.

The pound fell 0.7 percent to $1.4345 as of 4:08 p.m. London time, its steepest decline since May 3. It has dropped 2.7 percent versus the dollar since the end of 2015.

Ibrahim’s team may look to enter long positions on sterling if U.K. votes to stay and data improve, he said. A long position is a bet an asset will appreciate in value.