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In view of Tim Riddell, senior market strategist at Westpac, Brexit remains the key driver of GBP in the near term.

Key Quotes

“The inability of UK to agree upon a Brexit Withdrawal Agreement is now bearing down on Article 50’s 29th March end date. Risk of a “no deal” exit has been reduced, but UK needs to gain agreement from EU on any form of extending the negotiating period.”

“Failure could force UK to revoke the tabling of Article 50 and could still trigger an unintended disorderly departure if EU refuses to any extension (though unlikely) and UK refuses to revoke Article 50. UK’s political divisions and ineffectiveness could lead to variety of other outcomes, but the EU Leaders’ Summit (21st – 22nd) is the near term focus.”

“GBP/USD has underscored an effective 1.30-1.37 range. Relatively slim risks of an unintended no-deal exit could force a downside extension, but bias is for a rise through the range into the EU Summit.”