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Tim Riddell, Research Analyst at Westpac, suggests that for the UK economy, next week’s data provides the latest update on employment, inflation and retail activity.

Key Quotes

“Low real income remains a critical issue for households and discretionary spending. The lift in retail activity over the warm summer was reflected in recent solid production and GDP data. Brexit uncertainty is increasing as the March 29th deadline approaches and it will likely weigh on business intentions for both investment and employment. That uncertainty may weigh on salaries and contain real wages growth. Although this may not appear in current data, if real wages fails to lift it may hurt GBP.”

“However, Brexit and pre-budget politics will remain the more powerful drivers of GBP. Media suggest that a draft EU/UK proposal on actual exit could be published next week, but any lack of detail is likely to disappoint. Tensions into the 29th Oct budget and gov’t proposals to pay for more NHS funding may well dampen GBP as will political bargaining in order to ensure the budget is passed.”

“GBP/USD remains in a 1.27-1.35 range.”