GBP: Under pressure as Brexit noise returns to haunt – ING

The UK government outlined its position on future customs arrangements with the EU last week and while a transitional period is sought, the lack of clarity on its length may be seen as a near-term disappointment, explains the analysis team at ING.

Key Quotes

“We expect GBP to trade with a negative bias ahead of the Tory party conference and key Brexit talks in October. But it's difficult to see any material GBP fallout in the absence of any flaring tail risks such as a breakdown in the negotiations and renewed cliff-edge Brexit risks. We'll be closely watching how business sentiment is holding up in the August CBI surveys (Tuesday & Thursday).”

“A mixed bag for UK data last week has put talks of a Bank of England (BoE) rate hike on the back burner. We are not looking for any revisions to second quarter GDP (Thursday), with an unchanged 0.3% QoQ print confirming a weak quarter of activity. UK rates have adjusted to a wait-and-see BoE policy approach now and we would need to see higher US rates for GBP/USD to move lower towards 1.26-1.27.”