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A significant narrowing of the polls weighs on the pound, which failed to recover from the lows.  Is all this speculation justified?

Here is their view, courtesy of eFXnews:

ANZ FX Strategy Research notes that the initial rally in sterling based on expectations of a landslide victory for PM May in the 8 June general election is unwinding as opinion polls show a sharp rise in the support for the opposition.

In that regard, ANZ notes that  Brexit negotiations are due to start soon after the election and the initial iterations have been reasonably fraught  regarding what bill the UK will face on exiting, the rights of EU workers in the UK and vice versa

There is no point in speculating on the outcome at present.  Based on available information, GBP/USD is a sell on rallies.

What we do know is that the pound has shown some evidence of basing in the early months of this year, it is materially undervalued (20%+) and there has been an improvement in the current account deficit (Q4 2016: 2.2% of GDP vs Q3: 5.3%). That may help to constrain the downside for the time being, especially as difficult negotiations are discounted,” ANZ argues.

GBP/USD is trading circa 1.2810 as of writing.

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