Brexit talks are into their third round. While the UK offered some concessions, the EU does not see enough progress. What does this mean for the pound? The team at BTMU analyzes:
Here is their view, courtesy of eFXnews:
BTMU FX Strategy Research argues that while the negative Brexit sentiment could put a downside pressure on GBP over the coming weeks, strong UK economic data could mitigate that and provide some support.
it is worth remembering that at some point lower BoE MPC officials would likely start to hint at potential inflation implications given the MPC tolerance for an inflation overshoot is not infinite.
“The latest QIR shows a pound NEER value assumption of 77.000 this year – we are currently averaging 76.650 on a year-to-date basis. A continued slide would start to add to the inflation overshoot which is currently estimated to peak at 2.75% in Q4 2017.
If the economic data was to show some improvement that combination would help provide support for the pound.
So we remain sceptical of how much further scope there is for pound selling,” BTMU argues.
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