GBP: If Johnson is confirmed as UK PM, Sterling would be at risk of weakening - Rabobank


While there have been warning signs on the UK economy, political outcomes regarding Brexit dominate the outlook for the pound, explained analyst at Rabobank. They noted GBP has been testing key technical levels. 

Key Quotes: 

“In recent sessions, cable traded below the December 2018 low of 1.2478, reaching levels last seen more than two years ago before bouncing back. If a break below this level is sustained, from a chartist’s perspective, this would put the GBP/USD 1.2351 level in view.”

“If Johnson is confirmed as UK PM next week, GBP would be at risk of weakening. His rival, Hunt, is likely to be greeted a little more favourably by UK investors due to his more pragmatic view on the October 31 Brexit deadline. Even on the scenario of a cliff edge Brexit being avoided this year, UK investors will have to cope with the legacy of Brexit on the political system. A delay to Brexit could result in the Tories limping into the next election.”

“Our central view that Brexit will be delayed beyond October this year suggests that GBP will likely retain some poise in the months ahead. That said, kicking the can down the road is clearly not a solution and will serve to prolong uncertainty and act at a continued drag on investment. This means the permanent costs to the economy could become more marked. We forecast EUR/GBP at 0.87 and GBP/USD at 1.30 on this scenario on a 6 month view.”

“If a deal is done in the next year or so, we see scope for EUR/GBP to return to the 0.83/0.83 region and for cable to trade around 1.39. This assumes no general election. On a no deal Brexit, we see risk of EUR/GBP rising to parity and cable dropping to the 1.12 area.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD rising after upbeat German PMI data

EUR/USD is trading around 1.1100, up on the day. German manufacturing PMI surprised with 43.6 and other figures also beat expectations. The ECB minutes are next.

EUR/USD News

GBP/USD stabilizing above 1.2100 ahead of the Johnson-Macron meeting

GBP/USD is trading above 1.2100, steady. After German Chancellor Merkel offered UK PM Johnson 30 days to solve the Irish Backstop problem, Johnson meets French President Macron.

GBP/USD News

USD/JPY: Weaker below 106.50, focus on T-yields ahead of Powell

USD/JPY trades weaker below the 106.50 level, tracking the negative S&P 500 futures and a cautious sentiment on the Asian equities, as attention shifts from the FOMC minutes to the Fed's Powell speech for fresh direction. 

USD/JPY News

Gold: Trapped in a symmetrical triangle

Gold is trapped in a narrowing price or a symmetrical triangle pattern, according to the 4-hour chart. The yellow metal rose to a six-year high of $1,353 per Oz on Aug. 13 and has charted lower highs and higher lows ever since.

Gold News

USD/CNH: Rallies, confirms falling channel breakout

Another wave of CNH selling could soon hit the market as the pair technical charts are reporting a bullish breakout. For instance, the pair has jumped 0.22% to levels above 7.08 today, confirming an upside break of the falling channel on the 4H chart.

Read more

MAJORS

Cryptocurrencies

Signatures


  •  
  •  
  •  
  •  
  •