Pound Risks Becoming Irrelevant as Brexit Dims Reserve Status
- Deutsche Bank says the pound’s role as a buffer diminished
- Currency reserve managers seen slowly moving away from pounds
How Is Brexit Moving the British Pound?
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The fallout from the U.K.’s vote to exit the European Union includes the risk of the pound losing favor as a place for safe-keeping by global managers and their $11 trillion stockpile of reserves.
“To the extent that reserves serve as backstops against currency stress, rather than as sovereign wealth, the pound’s diminishing role in international capital flows post-Brexit should permanently reduce its reserve status,” Robin Winkler, a London-based Deutsche Bank AG strategist wrote in a note. “The pound may offer value, but is increasingly irrelevant.”