GBP: Brexit uncertainty remains a weight on the pound - MUFG

Lee Hardman, Currency Analyst at MUFG, suggests that the hard Brexit fears could trigger fresh pound selling.

Key Quotes

“It is also very difficult for the pound to rebound sustainably while Brexit uncertainty remains elevated. It is reassuring that the UK economy is holding up better than expected at least initially, but there is still little clarity regarding the UK’s likely future relationship with the EU and the rest of the World following the Brexit vote.

Market participants remain fearful that the UK could be heading towards a “hard” Brexit which could potentially increase the long run cost of leaving the EU for the UK economy and require a weaker pound to support the economic adjustment. As it is the prevailing consensus view that a “hard” Brexit would be the most damaging outcome for the UK economy, any signals from the UK government and/or other EU members that talks are heading in that direction could trigger fresh pound selling.”