After Shorting the Pound, Crispin Odey Says It May Plummet 20%

(Bloomberg) -- Bearish hedge-fund manager Crispin Odey says the pound could lose a fifth of its value if the U.K. exits the European Union without a deal.

Odey, who has repeatedly warned of market chaos and has lost money betting on it in the past, is currently shorting sterling along with U.K. equities. He also doubled down on his wagers against long-dated gilts last month, according to an investor letter seen by Bloomberg.

“The pound is very, very under-valued,” Odey said in a phone interview. Even so, it could have further to go, he said. “If we’re crashing out, we could lose 20 percent in a week before it bounces.”

The pound is trading almost 30 percent below fair value, the second-biggest undervaluation among Group-of-10 currencies, based on the Big Mac purchasing-power parity model.

Sterling has already lost 14 percent of its value since the June 2016 referendum when Britain decided to leave the EU, and has flirted with its weakest levels since the 1980s.

A vocal supporter of Brexit, Odey called on Prime Minister Theresa May to resign and said he’d “love” Boris Johnson to replace her, despite his detractors.

“The question is, who else is there? Raab is obviously one of them, but he’s a bit of a lawyer,” he said, referring to former Brexit Secretary Dominic Raab, who resigned on Thursday citing disappointment with the prime minister’s EU divorce deal.

©2018 Bloomberg L.P.