Will euro and sterling hit parity in 2017?

The pound's difficulties continue...

Will euro and sterling hit parity in 2017?

David Cheskin / PA

The pound is not set to rebound in 2017 according to a new note from HSBC.

When it comes to the currency's outlook, it believes that the UK is set for a prolonged period of damaging negotiations with the EU - which will create uncertainty and weigh down the currency.

The bank stated that the pound, "remains vulnerable to a potentially acrimonious negotiation process with the EU and the lingering possibility of a 'no deal' outcome."

During her election campaign, Prime Minister Theresa May has repeated the slogan that "no deal is better than a bad deal," when it comes to Brexit talks.

"We continue to believe GBP/USD will weaken back to 1.20 and EUR-GBP will move to parity by the end of 2017 on the back of political, structural and cyclical pressures," HSBC strategists David Bloom and Daragh Maher forecasted.

The closest the pound has come to the euro since it launched was €1 buying 98p at one point during the 'financial crisis.'

£1 currently buys €1.14 as sterling has failed to regain its losses since the Brexit vote.

As polls tighten and the possibility of a hung parliament looms after June 8th JP Morgan, the world's second-largest currency trader, issued a note saying that a strong performance from Labour could help sterling values to rise.

It reasons that a poor Conservative performance will give it less control to pursue its current strategy of pushing for a 'hard Brexit.'