GBP: Political uncertainty and survey data to be key drivers - Westpac

Tim Riddell, Research Analyst at Westpac, suggests that as in continental Europe, there is a lack of hard data into month end and political uncertainty and survey data will be key drivers of GBP.

Key Quotes

“Bank of England Governor Carney and Chief Economist Haldane increased market volatility as they respectively stated that “now is not the time to hike rates” and then that rates could rise in “the second half of this year”. Although appearing contradictory, the provisos on politics and the consumer are consistent. This highlights the importance of monitoring consumer/retail activity into 3Q’17. The latest BoE agents’ report had a stable outlook for business intentions, but the turnover in consumer services and drop in volume of faltering retail sales suggest that the household is under pressure.”

“GBP/USD and EUR/GBP are likely to be volatile in ranges. GBP/USD appears likely to be capped now in the 1.28s and is at risk of sliding towards 1.23-1.24.”