Uncomfortable Brexit realities should send GBP/USD back to the low 1.20s - Westpac

Tim Riddell, Research Analyst at Westpac, views that the solid consumer confidence of UK and position adjustment allowed GBP to rebound during the recent hiatus before Brexit negotiations genuinely begin.

Key Quotes

“The May government seems likely to have Brexit debated in parliament and is also being forced into revealing their negotiation plans. This unveiling of uncomfortable truths is likely, as previously stated, to mean that BoE will maintain its current accommodative stance. This combination should weigh on GBP once more.”

“Inflation pressures will rise, but the full impact of GBP’s slide is likely to be seen in early 2017. This will lead to a period of discomfort for BoE until Brexit impacts on the economy become clearer.”

“Consumer confidence has defied Brexit concerns, so far, and so retail sales into the festive season will be of key interest, especially after the delayed Brexit reaction in production data.”

“Uncomfortable Brexit realities should send GBP/USD back to the low 1.20s.”