GBP: Guided by the Brexit – Westpac

Tim Riddell, senior market strategist at Westpac, suggests that UK remains understandably myopically focused on next week’s parliamentary Brexit votes after over 140 weeks since the Brexit referendum and only 21 days before Article 50’s 29th March end date.

Key Quotes

“May’s Withdrawal plan is again at risk of failure. If defeated, Parliament will then vote on avoiding a no-deal exit option and extending Article 50’s end date.”

“GBP rose in recent weeks as risk of a no-deal exit was reduced but also on the possible reduction of uncertainty over Brexit. A deal or a clear extension date may allow GBP to lift once again, but uncertainty will not go away, it will only change.”

“If a Withdrawal Agreement deal is made, it merely marks the start of next stage of negotiations for the future relationship of UK and EU. If the vote fails, uncertainty will remain over what sort of extension can be sought and how some form of Withdrawal Agreement can be found.”

“Next week’s production data should confirm Brexit strains and though receipts are sound, the Spring Statement may highlight fiscal constraints as broader uncertainties persist. GBP/USD is now in a likely 1.30-1.37 range.”