UK: Economy guided by Brexit negotiations - Westpac

In view of Tim Riddell, Research Analyst at Westpac, Brexit negotiating gloves have been removed and an increasingly EU hard line after last weekend’s EU-27 Summit is bound to unsettle confidence for UK.

Key Quotes

“UK opposition parties seem to be intent on handing May her expected victory, but now she has to sustain the advantage to increase her mandate and then focus on those “threats” from Europe.”

“Data and business surveys still suggest that UK’s strength into 2017 is holding up. However, recent housing surveys are faltering. Consumer and market confidence could wane if forthcoming housing data or the BoE’s Inflation Report indicate weakening of trends. If the recently less dovish tone of the MPC were to turn, GBP shorts could be swiftly reinstated.”

“The 1.30-1.32 area should continue to cap GBP/USD and it remains at risk of sliding towards the centre of its 1.20-1.32 range, especially should data falter.”