COMMENT-Brexit's been very bad for pound and may get worse

The pound was much stronger when the UK was in the European Union and, after failing to recover a large part of the losses that resulted from a split, the future looks bleak and an even weaker pound looks likely.

Before the referendum in 2016, GBP/USD had been trading in ranges above 1.40 that had at points approached 1.70. Afterwards, the pair dropped into a range that was closer to 1.20-1.40 before briefly flirting with parity.

The subsequent recovery supported by tighter monetary policy that has slowed the economy - which slipped into recession last year - has fallen far short of the levels trading before.

It may get worse, with easing required to support the economy during leaner times undermining a currency that traders purchased to benefit from the higher level of UK interest rates.

Another drop may be fuelled by the liquidation of long positions that will probably begin in advance of the series of rate cuts that are expected to begin in August, but perhaps in June when there is a 50% probability of a rate cut.

The peak of GBP/USD trading ranges has dropped substantially in each of the last three years, from 1.4250 in 2021, to 1.3749 in 2022 and 1.3144 last year.

March's peak at 1.2893 may represent another significant peak in the pound's long-term decline.

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