BlackRock’s Gordon Ibrahim halts bets on sterling before vote

BlackRock’s Gordon Ibrahim is bailing out on the pound. 

The currency’s heightened volatility before the UK’s looming vote on its EU membership means the pound is trading “entirely outside any investment models,” according to the London-based portfolio manager within BlackRock’s Model-based fixed-income business.

Mr Ibrahim, whose unit has $43bn (€37.7bn) of assets under management, is aiming to close all sterling positions as the referendum approaches, he said.

Sterling has taken the brunt of the market’s anxiety before the June 23 vote on whether to exit the world’s largest trading bloc, sliding this year against all of its Group-of-10 counterparts.

Concern leaving the EU would damage the UK economy has pushed gauges of anticipated sterling volatility to the highest since 2010. Bank of England governor Mark Carney said on Thursday a vote to leave the EU could have “material effects” the currency.

“We have been dramatically reducing the risk we were taking in sterling and we continue to do that heading into the referendum as the outcome could potentially be very negative for the currency,” Mr Ibrahim said.

The pound fell 0.7% to $1.4345 in London trade, its steepest decline since May 3. It has dropped 2.7% against the dollar since the end of 2015.

Mr Ibrahim’s team may look to enter long positions on sterling if UK votes to stay and data improve, he said. A long position is a bet an asset will appreciate in value.

IMF chief Christine Lagarde also said yesterday there were no economic positives to Britain leaving the EU and that the impact would range from “pretty bad to very, very bad”.

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