GBP: Mixed fortunes – Westpac

General USD weakness may have lifted GBP/USD, but the tangible increase in frustration, especially from the EU, in current Brexit negotiations is pushing EUR/GBP towards the initial post-Brexit vote extreme, according to Tim Riddell, Research Analyst at Westpac.

Key Quotes

“The reluctance of Japan to initiate trade talks prior to actual Brexit and stumbling EU/UK talks are likely to weigh on business confidence, despite some relatively solid manufacturing surveys recently.”

“Last week’s CBI report highlighted divergence between retailers and manufacturers. If the slump in the retail sector is reflected in service sector PMIs it will show that higher CPI and poor wage growth are impacting household balance sheets and so the consumer - the key support for UK activity.”

“House surveys are also sliding and weighing on both UK confidence and prospects for GBP. Position adjusting GBP rebounds are likely to be limited.”