NZD/GBP rebound could extend to 0.5325 - Westpac

NZD/GBP’s recent rebound could extend to 0.5325 - the Nov high as the GBP should remain capped, despite relatively solid data, with Brexit risks maintaining downside pressures, suggests Imre Speizer, Research Analyst at Westpac.

Key Quotes

“GBP’s key event risk during the month ahead is the Brexit negotiations which should restart in mid-Jan. There’s also BoE MPC (8 Feb), Agents’ Report (20th Dec) & Inflation Report (8th Feb).”

“3 months ahead: The BoE has said that Brexit is their key concern for the UK economy and is a factor behind their glacial policy grind towards a 1.00% policy rate into late 2020. Medium term direction thus depends largely on whether the uncertainty from Brexit eventually causes a slowdown in activity. If not, then NZD/GBP could head lower towards 0.50.”