Swissquote Ltd | Apr 16, 2018 11:35
In our view GBPUSD rally to 1.4280 is more a function of USD weakness them purely confidence in the UK. We remain slightly bearish on the outlook for the sterling. Despite general optimism driven by the positive progress in Brexit talks, driven by failure of economic recession post-Brexit predictions to materialise and strength of trading partners, the UK is in a fragile place.
There is increasing evidence of a global slowdown which will manifest itself in weaker UK growth and inflation. This will also decelerate BoE interest rate expectations providing USD will sustained yield differential and rotating investors back into USD from GBP.
Finally, increased focus on complex trade talks, led by US/China, will likely push Brussels into a tougher stance on UK relations. 'Break throughs' will become hard and harder to achieve. We think the market was muted in pricing in proposals for a border between the Republic and Northern Ireland. Given the complexity of the issue both from a Brexit economic standpoint and socially/politically, we should have seen higher GBP volatility. In regards to Brexit, investors have clearly been conditioned to ignore short-term hype. Hences the lack of movement. UK-EU must avoid a hard border of extensive custom checks. The Republic and Northern Ireland will plague negotiations moving forward. This is one of those convergence issues that make the UK-EU relationship so difficult to unwind.
Disclaimer: While every effort has been made to ensure that the datat quoted and used for the research behind this document is reliable, there is no guarantee that it is correct, and Swissquote Bank and its subsidiaries can accept no liability whatsoever in respect of any errors or omissions, or regarding the accuracy, completeness or reliability of the information contained herein. This document does not constitute a recommendation o sell and/or buy any financial products and is not to be considered as a solicitation and/or an offer to enter into any transaction. This document is a piece of economic research and is not intended to constitute investment advice, nor to solicit dealing in securities or in any other kind of investment.
Although every investment involves some degree of risk, the risk of loss trading off-exchange forex contracts can be substantial. Therefore if you are considering trading in this market, you should be aware of the risks associated with this product so you can make informed decisions prior to investing. The material presented here in not to be construed as trading advice or strategy. Swissquote Bank makes a strong effort to use reliable, expansive information, but we make no representation that it is accurate or complete. In addition, we have no obligation to notify you when opinions or data in this material change. Any prices stated in this report are for information purposes only and do not represent valuations for individual securities or other instruments.
Written By: Swissquote Ltd
Fusion Media will not accept any liability for loss or damage as a result of reliance on the information contained within this website including data, quotes, charts and buy/sell signals. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible. Currency trading on margin involves high risk, and is not suitable for all investors. Trading or investing in cryptocurrencies carries with it potential risks. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Cryptocurrencies are not suitable for all investors. Before deciding to trade foreign exchange or any other financial instrument or cryptocurrencies you should carefully consider your investment objectives, level of experience, and risk appetite.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures), Forex and cryptocurrencies prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn’t bear any responsibility for any trading losses you might incur as a result of using this data.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.