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Analysts at Scotiabank explained that UK shop prices remained soft in May, according to the British Retail Consortium’s survey (shop prices were down 1.1% this month overall, after a 1.0% fall in Apr).  

Key Quotes:

“Political risks continue to simmer for the GBP as the UK government’s Brexit plans around the Irish border issue continue to attract critical comments from the EU.”

“We think GBP volatility may increase in early Jun as Parliament votes on Brexit legislation following the heavily amended passage of legislation through the Lords.”

“Sterling remains fundamentally vulnerable in the near-term, we feel.”

“Sterling has climbed off the lows amid a broader slide in the USD but price patterns are not especially constructive for and rather suggest a market that is correcting modestly ahead of another drop (bear flag or wedge on the intraday chart).”

“We see resistance at 1.3305/10 and minor trend resistance at 1.3335.”

“Key support is 1.3255/60 intraday (GBP slide resumes below here).”

“We remain broadly bearish on the GBP outlook following the loss of support at 1.3715 at the start of the month and feel risks remain tilted towards a test of the 1.31 area.”