- GBP subject to Brexit progress and it's looking to a bumpy road ahead.
- UK business confidence best levels YTD while consumer confidence losest level since 2013.
The Times has reported that UK "Business confidence has recovered to its highest levels since January because of growing optimism about the outlook for the economy and the prospect of Brexit clarity after the general election".
The article is gated but it reads in the opening paragraphs as follows:
While consumer confidence is stuck in negative territory, business confidence has risen for the third consecutive month, according to the Lloyds Bank Commercial Banking Business Barometer. Confidence rose by three percentage points to 9 per cent.
The survey, based on responses from 1,200 companies, suggests that firms are hoping that the election will bring some clarity on Brexit. Business concerns about leaving the EU eased to -16 per cent in November, the least negative since January. A net balance of 22 per cent of businesses said that leaving would have a positive impact on trading,…
Consumer confidence is running along at its lowest since 2013
Meanwhile, the GfK Consumer Confidence for November arrived at -14 (expected -14).
FX implications
GBP is subject to Brexit sentiment and these kinds of numbers offer a starkly different view from between businesses and UK households. Ultimately, its businesses that drive the economy, but they can only perform if the consumer is active and engaged. However, considering that the Tory party is favoured, by some margin, to win the elections, GBP can remain elevated on prospects of a Brexit deal finally being done. Looking too far forward is simply not actionable in spot FX, but markets will be quick to be concerned about a bumpy and treacherous road ahead for GBP considering trade negotiations and agreements between the UK and EU that will likely be just as elusive as the withdrawal agreement has been.
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