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Thomson Reuters
Jul 18 - 01:24 PM
GBP/USD: Political Uncertainty & Soft Inflation Could Push-Back BoE August Hike - MUFG
First appeared on eFXplus on Jul 18 - 10:06 AM

MUFG Research discusses GBP outlook and notes that the negative impact of heightened UK political uncertainty on the performance of the pound is becoming more evident, which along with today's soft UK CPI print could prompt rate hike expectations to be pushed back significantly. 

"The latest developments clearly highlight the government’s fragile grip on power and lack of flexibility in Brexit negotiations.

Understandably market participants are building in a higher risk premium into the pound to reflect heightened uncertainty, and the risk premium may need to rise further heading into year ahead. The one reassuring development for the pound is that the numbers in parliament should still favour a softer Brexit when it comes to the crunch even if the votes this week do not back up our view," MUFG adds. 

BTMU Research/Market Commentary


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