Opinion: Sterling 'reliant on the kindness of strangers'

Sterling's weakness after the Brexit vote should be seen in the context of longer-term concern regarding the UK's current account deficit, writes EFG Asset Management chief economist Daniel Murray.

Mark Carney, governor of the Bank of England, warned before the Brexit vote that a decision to leave the EU could test "the kindness of strangers". The UK relies on such 'strangers' - essentially overseas investors - to finance its large current account deficit. Investors hedge FX as currency drives returns This is expected to be almost 6% of GDP in 2016, which is large both by international standards and in comparison to the UK's own history. If such 'strangers' become less willing to invest in the UK - in its property market, equity and bond markets or through direct investment i...