In this piece, we present our updated UK macro outlook

Brexit continues to take its toll on the British economy. Underlying growth is likely to remain in the range of 1.0-1.5% in the years ahead. The labour market has been quite resilient for a long time but recently we have become more concerned.

The general election is decisive for the Brexit outcome but unfortunately, it is very difficult to predict the outcome.

The acknowledged MRP model from YouGov predicts The Conservative Party will win an absolute majority and so make it possible for Boris Johnson to pass his Brexit deal before Christmas, which is now our base case. The UK will then leave the EU by 31 January 2020 and start the negotiations on the future relationship. There is risk of a "no deal Brexit" by 31 December 2020 if no deal is reached or the transition period is not extended.

If the opposition wins, we expect a second EU referendum. The risk is another hung Parliament with no stable majority, which would require another extension.

We expect the Bank of England to cut at its meeting in January 2020 and think it is a close call whether or not there will be another cut in the second half of 2020.

Download The Full UK macro outlook

This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.

Analysis feed

Latest Forex Analysis

Editors’ Picks

GBP/USD surges toward 1.3150 amid upbeat UK data, USD weakness

GBP/USD has been extending its gains after the British CBI Trends figure beat expectations. Markets are pricing a BOE rate cut less aggressively. The US dollar is on the back foot across the board amid reduced coronavirus fears.

GBP/USD News

EUR/USD struggles to recover amid Trump's tariff threats

EUR/USD is trading below 1.11, close to the three-week lows, as President Trump continues threatening the EU with car tariffs. Markets remain concerned about the spreading coronavirus disease. 

EUR/USD News

Australian employment Preview: Upbeat numbers could temper rate cut expectations

Australia will release this Thursday its  December employment data. The economy is expected to have added 15.0K new jobs in the month, following a 39.9K increase in November. 

Read more

Gold Price Analysis: Intraday uptick falters near 50-hour SMA, remains vulnerable

Gold lacked any firm directional bias and seesawed between tepid gains/minor losses through the mid-European session on Wednesday.

Gold News

USD/JPY rises above 110.00, potential head-and-shoulders on 1H

Risk reset in stocks is boding well for USD/JPY.  The pair may be forming a head-and-shoulders pattern on the hourly chart. The bulls are not out of the woods yet and a break above 110.12 is needed to invalidate lower highs setup on the hourly chart.

USD/JPY News

Forex Majors

Cryptocurrencies

Signatures