GBP: Politics and sentiment will have an increased impact - Westpac

According to Tim Riddell, Research Analyst at Westpac, a lack of hard data over the next week will mean that politics and sentiment will have an increased impact on GBP.

Key Quotes

“The recent shift in BoE’s bias together with solid inflation and activity data saw a positive skew in sentiment towards GBP. The initial stances on Brexit negotiations will be critical in maintaining such a shift.”

“United (or not so) Kingdom also faces ructions from Scotland and N. Ireland. Though these may not directly impact markets, domestic sentiment may alter.”

“Reduced CFTC fund-related shorts led to a GBP/USD rebound, but uncertainties over Brexit negotiations are likely to weigh on market sentiment and GBP. Although range support has developed, it is unclear whether GBP is finding a base.”

“GBP/USD remains contained within a 1.20-1.28 range, but in the absence of hard data, GBP appears more likely to slide towards recent range lows.”