British pound could rally to $1.65 in 2020, strategist predicts

Sterling notes and coins are laid out for a photo.
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The British pound could soar to $1.65 in 2020 and the currency will be one of the biggest trades in the world, a currency strategist told CNBC Thursday.

Speaking to CNBC's "Squawk Box Europe," Michael Harris, founder of Cribstone Strategic Macro, predicted the currency could see a surge as investors revaluated the U.K.'s long-term potential.

"What we're going to get is a country where everyone has been on hold — this is massive pent-up demand — and as soon as it becomes clear that there's an investable case here based upon some clarity of the direction of this country, the pound has to rerate," he said. "It'll be one of the biggest trades in the world."

The pound rallied to $1.35 — a jump of more than 2% — following pro-Brexit Boris Johnson's election victory last month.

However, the currency plunged to $1.31 just days later as Johnson's government set a deadline of the end of 2020 for the U.K.'s departure from the bloc, refuelling concerns about the possibility of a no-deal Brexit.

Sterling was trading down 0.3% against the dollar at $1.3208 on Thursday morning London time.

British pound is going to go huge, strategist predicts

Harris told CNBC that he did not consider the prospect of a disorderly Brexit as a realistic risk for the pound.

"I don't know whether it's going to $1.55 or $1.75, but I do know this — the pound is going to go huge," he said. "Maybe it'll take 18 months, maybe it'll take 24 months, but the idea that after the election people are still talking about a hard Brexit is absolutely absurd."

Following the Conservative Party's landslide win in the U.K.'s December election, currency analysts told CNBC they expected sterling to hold onto its gains into the first quarter of 2020 — but some warned that risks relating to Brexit remained, putting a lid on the currency's potential.

But according to Harris, there is no reason Brexit won't be sorted before the Conservatives' end-of-year deadline.

"The reason it wasn't getting sorted before is because there was always the hope it wouldn't happen," he said.

"Theresa May had leverage, and she didn't use it because she signed something prematurely — Boris (Johnson) is using leverage to the hilt and he's showing how he can deliver on that."

He noted that a huge percentage of the British electorate supported Brexit-backing parties in the December election, describing the outcome as a "phenomenal endorsement of Brexit."

"It just put the issue to bed," Harris said. "There's no hope whatsoever for anyone to reverse this."