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The tone of guidance around any BoE hike, the split on voting and economic projections within the BoE’s Inflation Report will be closely monitored and assimilated into next week, but the outlook for Brexit negotiations will remain the key driving factor for GBP this month, according to Tim Riddell, Research Analyst at Westpac.

Key Quotes

“August is normally a calm month for politics, but May and her Cabinet will be garnering support for the Chequers Brexit proposals through this month both across EU and within the fractious Tory Party. The annual party conference season kicks off in September, with the Tory conference at the end of the month, so finding support well in advance is needed to fend off a leadership challenge. This is likely to be difficult given the likely push to gain an agreement with EU on an exit plan but delay/extend negotiations over what post-Brexit arrangements will be.”

“Activity and survey data is likely to highlight how uncertainty is impeding UK’s economy so GBP/USD should remain under pressure within its apparent 1.28-1.37 range.”