German bank: the pound looks more fragile than the euro

On January 14th, Jinshi Data reported that the British pound fell to a two-year low against the US dollar, while the exchange rate against the euro hit a new low in 10 weeks, and then the pound rose. However, Michael Pfister, an analyst at Deutsche Bank, said in a report that the pound is still vulnerable to rising bond yields and weak economy, and is more susceptible to impact than the euro. He said that the pound is no longer one of the world’s major reserve currencies, so if UK government bonds depreciate, investors would “prefer to transfer their reserves to other currencies until the turmoil ends.” Pfister also said that the Bank of England has limited room to cut interest rates, which means that the UK economy may have difficulty recovering, and the pound will be affected as a result.