UK: Rising political uncertainty to have an impact on GBP - Westpac

Domestic political uncertainty is rising and could impact both Brexit negotiations and potentially domestic policies, suggests Tim Riddell, Research Analyst at Westpac.

Key Quotes

“Although a softer Brexit stance is seen as GBP friendly, this political uncertainty within the Tory-led coalition and rising support for Labour is likely to weigh on GBP. The level of unity at the Conservative Party Conference (Oct 1-4) could impact GBP over the next week.” 

“The surprise lift in CBI retail survey (42 from 8) goes against their own and other survey comments that the squeeze on household finances is hitting consumers. The last BoE Agents report highlighted this too. The flurry of surveys in the coming week will therefore be scrutinised for evidence of consumer pressures.” 

“GBP appears to be range-bound, capped by political uncertainty and strains on the consumer but supported by MPC guidance, though their next meeting (and Inflation Report) is not until 2 Nov.”