GBP: Brexit transition clarity to give direction - ING

Sandeep Kanihama FXStreet Contributor

Over the space of a week, we've had 3 key UK events and 3 muted reactions in GBP markets; the cumulative reaction to (1) the BoE's Brexit-contingent hawkish signal; (2) the positive UK inflation surprise (which confirmed the Bank’s hawkish signal); and (3) a fairly inconsequential speech by Boris Johnson – was a 0.5% move higher in GBP against both USD and EUR, explains Viraj Patel, Research Analyst at ING.

Key Quotes

“That’s a pretty tame reaction – even by the Brexit-impaired pound’s standards and to us, suggests that there is only one thing on the minds of GBP investors right now – and that’s clarity over a Brexit transition deal. The period leading up to the 22-23 March EU leaders summit will be noisy – but GBP’s relative resilience is telling of a different Brexit trading environment to what we saw in 2017. Look for GBP/USD to consolidate around 1.40 – with deferred upside on an agreed transition deal.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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