The pound is at risk of fading from the top ranks of central-bank asset holdings following Britain’s decision to leave the European Union.
The world’s foremost reserve currency a century ago, sterling has been overtaken by the dollar and the euro, mirroring the U.K.’s waning influence in the global economy. Now its 5 percent share of foreign-exchange reserves is in danger of shrinking further because of Brexit, compounded by forces including China’s push to bolster the international role of the yuan.
Diminishing use of sterling-denominated assets would vindicate the warnings of those who called for Britain to stay in the EU and potentially put upward pressure on U.K. borrowing costs. S&P Global Ratings, which stripped the U.K. this week of its last remaining top rating, sees Brexit affecting the pound’s role as a reserve currency. Sterling has dropped more than 9 percent since the June 23 vote sent the nation into a political crisis.
via Bloomberg 
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.