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How do I not love thee? Let me count the ways.

As regular readers will be aware, Deutsche Bank does not like sterling much – a stance that has been pretty painful so far in 2017.

Today, while some are beginning to wonder whether the time may soon be right to dip into some positive bets on the currency (hi, BAML) and the currency itself is performing pretty well, the German bank is doubling down, sketching out “five reasons (and six charts) to stay short”.

In summary, writes Oliver Harvey at the bank:

A positioning squeeze coupled with a broader dollar sell-off has made holding sterling shorts painful this year. We’re unconvinced the rally is sustainable.

Article 50 talks that “should start badly”, with “no fallback options for hard Brexit” and the risk that markets are over-reliant on the chance of a hawkish Bank of England are all warning signs, it says.

In addition, the UK’s current-account deficit is showing no sign of getting back into line, while valuation models still do not suggest that sterling is looking cheap.

All in all, the bank still reckons sterling is heading to $1.10 this year (from $1.2650 now) and close to parity with the euro, from €1.17.

Read more: Manufacturers see silver lining in sterling’s slump

Copyright The Financial Times Limited 2017. All rights reserved.
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