The UK Treasury's FX "war chest" to defend GBP in run-up to Brexit

Author: Eamonn Sheridan | Category: News

A (not surprising) heads up for currency intervention for when GBP goes wild on Brexit date. 

The Financial Times citing a Bank of America Merrill Lynch piece:
  • UK Treasury built up a foreign-currency war chest to defend the pound in the run-up to the original March deadline for Brexit
  • In the last three months of 2018 the UK's foreign exchange reserves grew by almost one-fifth, the largest increase since 2000
  • Treasury bulked up its euro holdings
  • accelerated pace of foreign-exchange reserve accumulation "was a direct result of increased uncertainty over the UK's post-Brexit future"
  • A rerun of similar events into the new October deadline, postponed from March 29, "could have implications for . . . UK FX reserve accumulation" and could weigh on sterling
Here is the link to the Financial Times for more
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BoA is referring to the UK Treasury's exchange equalisation account, which holds funds intended to counter "undue fluctuations in the exchange value of sterling".


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