Government guidance suggests a slow unwind of lockdown restrictions in the UK. Despite potential for a consumer led rebound, lack of near-term confidence may keep the cable range bound, analysts at Westpac appraise.
Key quotes
“Recent data in the UK has been more robust than forecast and it appears likely that a technical recession will be avoided, despite the likelihood of a sharp contraction in Q1 21. The Bank of England has reiterated that it foresees a consumer-led recovery fuelled by large savings that have been built during the past year of lockdowns.”
“Although there have been pronounced rebounds in certain activity surveys other business and confidence surveys have struggled to rebound. This disparity suggests that extended lockdowns, as in Europe, are constraining confidence.”
“How confidence fares on the announcement of the unwinding of the lockdown and the continued effective rollout of vaccinations will be critical in determining whether there may be a pre-Budget push for GBP to break above its current 1.3750-1.4000 range.”
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