GBP remains fragile on UK politics, BoE – Danske Bank

Jakob Christensen, Chief Analyst at Danske Bank, assessed the perspective for the Sterling amidst the ongoing uncertainty in the UK politics and the hawkish BoE.

Key Quotes

“GBP continues to underperform on weak UK data and weak appetite for GBP in general, and EUR/GBP is approaching the high end of the 0.8750-0.89 range as we have called for”.

“Today, focus will be on Theresa May’s speech, which concludes the four-day Conservative Party Conference. We expect Theresa May to repeat many of the key points from her speech in Florence, but we could see a modest relief in GBP today given the past days’ underperformance”.

“In terms of the Bank of England, both McCafferty and Haldane are scheduled to speak on Friday evening. The market is still pricing in an 80% probability of a rate hike in November”.

“We do not expect this to change much before the release of the September CPI figures and labour market report due on 17 and 18 October, respectively. Hence, we still see EUR/GBP within the 0.8750-0.89 near term”.