GBP: Here Is Why Further Downside Is Likely Limited From

The pound jumps and falls on central bankers’ musings. What’s next?

Here is their view, courtesy of eFXnews:

BTMU FX Strategy Research holds an  optimistic assessment of the Brexit negotiations  moving toward a favorable transition phase (2yrs perhaps) beyond the current end-date of negotiations currently set at 29th March 2019.

“We believe it is in the interest of both sides to ‘dial-down’ that cliff-edge date and by focusing quickly on a transition deal that effectively will mean the UK remaining in the Single Market for longer is a scenario we see as becoming the “reality of Brexit negotiations” perhaps by Q1 or Q2 2018.

For this reason,  we had pencilled Feb 2018 for a first rate hike by the BoE,” BTMU argues.

As such,  BTMU  concludes that the downside for the GBP from here should be limited given the prospect of a favorable transition deal and given that scenario is also the assumption of the BoE  that prompted a conclusion in the QIR that rates may need to move higher than the financial markets are currently assuming.

For lots  more FX trades from major banks, sign up to eFXplus

By signing up to eFXplus via the link above, you are directly supporting  Forex Crunch.