Pimco: sterling could hit 30 year-low vs dollar after a Brexit vote

[LONDON] Sterling could fall to its lowest level against the US dollar in 30 years if Britain votes to leave the European Union at a referendum on Thursday, Pimco's head of sterling portfolios said on Wednesday.

Sterling could fall as far US$1.30 from about US$1.47 currently if Britain voted to leave the bloc, Mike Amey said in the Reuters Global Markets Forum. He said there was a 60 per cent chance that Britain would remain in the EU.

A "Leave" vote would also result in the Bank of England cutting interest rates, he said, but the fallout for other central banks would be limited.

"We do think the BoE would cut rates in the event of a Brexit, to zero (but not below)," he said. "For other central banks, we do not see a Brexit as a systemic event so we doubt other central banks would have to respond directly to any market fallout."

He said China posed the biggest risk to the world economy.

"We think the biggest risk for the global economy is China and how they deal with the build up in credit post financial crisis," he said.

REUTERS