UK: Surprising strength into 2017 is likely to falter - Westpac

Tim Riddell, Research Analyst at Westpac, suggests that UK’s surprising strength into 2017 is likely to falter and any signs of this in 1Q GDP could heighten attention on more timely near term survey data.

Key Quotes

“Market focus may turn from the election, given that it is some five weeks away, and react to the EU’s Brexit summit this weekend and then the state of the consumer. Weak retail sales last week failed to dent election driven GBP gains, but further slides in house price gains may be a more telling dampener to confidence and GBP.”

“Polls are currently very supportive of May increasing her majority and providing her with a clear mandate for Brexit and other policies. This should now support GBP if Brexit negotiations and consumer concerns increase and drag GBP lower.”

“GBP/USD should be capped in front of raised range resistance (1.30-32) and is likely to slide back towards the centre of its 1.20-1.32 range.”