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According to Tim Riddell, analyst at Westpac, for the UK economy, it’s still all about Brexit.

Key Quotes

“Despite all the vacillations over potential for a deal or careering towards a no-deal Brexit, the most likely scenario, though still far from certain, remains that of an extension of the Brexit deadline until the end of January and UK holding elections in late November.”

“On Wednesday, BoE released an update on financial sector stability. It stated that the sector was “resilient to, and prepared for, the wide range of risks it could face, including a worst case disorderly Brexit”. Although this may be comforting in that it means a disaster may be averted, this publication and the UK government’s “No Deal Readiness Report” (also released this week) highlight that considerable disruption will eventuate.”

“Near term, markets may look for the slim possibilities for a deal being found into the EU Summit (17th – 18th) and UK’s special parliamentary session on 19th. Monday’s Queen’s Speech, outlining the Johnson government’s plans outside of Brexit, is unlikely to impact markets, with attention likely to revert to implications of an election. Unless a deal is found, GBP/USD is likely to remain in its 1.20-1.27 range.”