GBP may slide again - Westpac

The vulnerability of May’s government could suggests a rocky path for the Great Repeal Act, as well as other legislation, and may further undermine the UK’s stance in Brexit negotiations and is likely to keep GBP under pressure, according to Tim Riddell, Research Analyst at Westpac.

Key Quotes

“These are now becoming concerns for both corporate and consumer confidence. Consequently, survey data may become increasingly important. Picking up on this shift, UK media are citing potential for a secondary Brexit referendum, as proposed by some former UK leaders. The net result is to increase uncertainty for investment and consumption.”

“USD weakness and debate over MPC dissent as inflation rises (for possible policy withdrawal) has lifted GBP.”

“If confidence and expectations for the peak in core inflation expectations slip, GBP may slide again. The break of 1.30 may merely have lifted GBP/USD’s range to 1.25-1.32.”