GBP: Caught in global crossfires amid lower sensitivity to Brexit headlines - ING

The near-term focus for GBP remains on the 22-23 March EU leaders summit – and the odds of a Brexit transition deal being struck this month, according to Viraj Patel, Research Analyst at ING.

Key Quotes

“However, while newsflow over this may give the pound some short-term directional impetus, we note that Brexit headlines are having less of a long-lasting impact on the currency – with investors opting to trade the reality of the UK economy (hard data) and the facts from any Brexit progress. The Chancellor’s Spring Statement should be a non-event given that no new policies will be announced, though the forecast for lower UK gilt issuance could be a positive development for GBP’s structural outlook (while the US ‘twin deficit’ is widening, the UK’s is seemingly narrowing – another reason for an undervalued GBP/$ to move higher in 2018… we’re targeting 1.45 over the coming quarters).”