Goldman Sachs on the potential impact on the GBP of Brexit

From George Cole, Robin Brooks and Michael Cahill og Goldman Sachs Macro Markets Strategy

This is via eFX

The number of moving parts in such a discussion precludes any definitive answer, but we can estimate the potential magnitude of a move. One way to do this is to assume that a ‘Brexit’ decision causes an interruption to capital flows into the UK that forces a sharp closure of the current account deficit, admittedly a strong assumption. To do this, we revisit our ‘FEER’ (fundamental equilibrium exchange rate) framework for the UK economy, first introduced here, which estimates the relationship between movements in the currency, domestic demand and the current account.

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