BoE’s accommodative stance should act to cap any GBP rebounds - Westpac

Tim Riddell, Research Analyst at Westpac, suggests that the positioning remains an issue with GBP shorts still at extremes, but the BoE’s accommodative stance should act to cap any GBP rebounds.

Key Quotes

“Markets have been remarkably sanguine on the potential uncertainty that will arise when Brexit negotiations begin. Although housing activity dropped off this year, prices have remained stable. Should that alter, the market will focus on this potential uncertainty.

The extent of UK’s visible trade deficit means that investment inflows remain critical. GBP declines may be needed to offset any faltering in the housing market. Given the lack of other data, the likes of Rightmove’s housing price release may have a greater impact than normal.”