Deutsche sees sterling sliding to $1.06 by year-end on Brexit

A British pound note is seen in front of a stock graph in this November 7, 2016 picture illustration. Picture taken November 7. REUTERS/Dado Ruvic/Illustration - RTX2SIYA

LONDON (Reuters) - Sterling will fall sharply this year to as low as $1.06 against the dollar, as the process of Britain leaving the European Union damages UK growth, currency analysts at Deutsche Bank said on Thursday.

In one of the most pessimistic outlooks for sterling yet among the world’s big banks, they also said it could fall towards parity with the euro. That would represent a fall of around 15 percent against both the dollar and euro.

“We do not see sterling (currently) fully pricing a hard Brexit outcome. Combined with limited adjustment in the UK’s current account deficit and slowing growth, we see further downside, and forecast $1.06 in by year-end,” they said in a 45-page special report on Brexit.

Sterling was trading around $1.25 against the dollar on Wednesday. The euro was changing hands at 86.30 pence, making the pound worth around 1.1585 euros.

Reporting by Jamie McGeever; Editing by Sujata Rao