Comments from Rodrigo Catril, NAB’s currency strategist, explaining how the latest headlines of the UK’s attempt to avoid a hard-landing Brexit scenario will result in a spike in volatility for the Sterling in the near-term.
Key quotes
“The agreement of a new ‘backstop’ as a last resort has been interpreted by the market as a positive step.
However, it still shows that there isn’t a consensus view within the government and it’s unclear if there is public support to stay in the customs union.
BOE and data are taking a back seat for now.
A proposal needs to be finalized before the end of June EU summit.
This suggests GBP will remain volatile in the coming weeks.
USD continues to win the “least ugly contest”; growth outperformance and higher yield differentials suggests USD will remain supported in the near-term.”
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