Theresa May helped the pound recover from the abyss with some hopeful words about the path for Brexit. What’s next for sterling? The team at NAB looks at the next levels for GBP/USD and EUR/GBP:
Here is their view, courtesy of eFXnews:
UK PM finally sets out government strategy for Brexit negotiations.
May confirms recent press leaks that she is prepared for a hard, clean Brexit and is prepared to walk away if the EU wants to invoke punitive tariffs.
But assuming Article 50 is triggered in March, the ball will be in the EU’s court, with May warning the EU27 against an act of economic self-harm
For GBP we suspect there may be some additional limited upside near-term as investors get squeezed and adjust to the PM’s clearer strategy, but in GBP/USD the 1.25-1.28 area should bring out sellers that cap gains.
For EUR/GBP, that might imply a slide to o.8450 – and perhaps even beyond – on the growing realisation that there are economic risks on both sides of the English Channel. That, however, may have to wait until after the dust has settled following Thursday’s ECB meeting.
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