GBP to remain under pressure – Westpac

Tim Riddell, Research Analyst at Westpac, explains that the deterioration in recently sound CBI trends, especially the retail sector, or in the BoE Agents’ survey of investment intensions will weigh on GBP.  

Key Quotes

“Data, politics and widening yield spreads should override rising short positioning as GBP/USD slides towards 1.20, if not 1.1850, even though broader range trading is likely to remain.”

“BoE’s MPC is unlikely to alter its stance given less impressive data, notably the roll lower in average weekly earnings growth, in early 2017. Pressures on the consumer are likely to rise as Brexit negotiations begin and the rising path of CPI impacts discretionary spending.”

“Critically, Feb CPI and retail sales as well as both CBI surveys and the BoE key Agents’ report are released in the next 10 days. Regulatory and Brexit concerns should become more pressing in both the CBI and BoE Agents’ reports.”