GBP: Sentiment swayed by the Brexit negotiations - Westpac

According to Tim Riddell, Research Analyst at Westpac, the lack of data and parliament’s Easter recess mean that sentiment towards GBP will be swayed by the posturing of both UK and EU in advance of genuine Brexit negotiations.

Key Quotes

“These should gain force after the EU (ex-UK) Brexit summit on 29th April, which should provide some clarity on the EU’s negotiating stance. However, initial comments from EU and notably German officials appear to be gearing towards a “hard Brexit”.”

“The firmness of the consumer into 2017 and the rebound in business sentiment may now be faltering. The warnings from BoE that consumers will face a squeeze from higher prices and low wage prospects could now appear in survey data. Recent housing data has been softening and should also weigh on household spending and confidence.”

“GBP/USD should struggle above 1.26 before sliding towards recent range lows.”