In the weeks ahead, GBP will be focused on how deep the coronavirus downturn is likely to be and how quickly the economy can recover. Overlaying this picture will be the direction of the post-Brexit negotiations, per Rabobank.
Key quotes
“We expect that these talks and the uncertainties connected with issues such as border and immigration procedures have the potential to increase the vulnerability of the pound in the months ahead.”
“While investors are likely to be encouraged by any reports that suggest that the forthcoming post-Brexit talks are progressing well, they will also be mindful that the UK may still carry out the threat of walking away from the talks without a deal.”
“Given the weight of economic uncertainty see risk of GBP/USD dipping below 1.20 on a 3-month view though we have pencilled in a relief rally later in the year.”
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