A survey of global investors by Barclays lays bare the depth ofmarket pessimism as the U.K. starts divorce talks with the EuropeanUnion.

Torturous, drawn-out negotiations with the EU that “involvea series of delays” is the likeliest scenario foreseen by themajority of the 642 respondents, Barclays strategist SreekalaKochugovindan wrote in a report accompanying the release of thesurvey on Monday. That “may in turn weigh on market sentiment,” shesaid.

About 64% are skeptical the exit will be orderly and expectprotracted discussions to sap the value of U.K. assets, inparticular the pound. Its sharp drop since the Brexit vote hascheapened the real effective exchange rate to near an historic low,and investors don't foresee a recovery to pre-referendumlevels.

The pound absorbed another blow from the Bank of England Tuesdaywhen Governor Mark Carney said he's still worried about the impactof Brexit on growth, and signaled it may be to soon to withdrawstimulative policy. The British currency lost 0.9% to $1.2617 as of3 p.m. in London.

A survey of economists by Bloomberg has the currencystrengthening more than 5% to $1.33 by 2020.

Consumer prices are picking up, presenting policy makers with aclassic stagflation dilemma, according to Charles Diebel, theLondon-based head of rates at Aviva Investors. They're more likelyto sacrifice inflation targets and the pound than douse growth withhigher rates, he said.

“Considering the amount of risk that faces the U.K economy withthe whole Brexit scenario and the uncertainties that go with that,the worst thing they can do is artificially slow the economy to tryand control inflation,” Diebel said in an interview with BloombergTV. “Our view is that policy makers will look through theinflation risk.”

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