Tim Riddell, Research Analyst at Westpac, suggests that the dichotomy between firmer UK business surveys and a slowing in recent housing surveys, dissent within the MPC, the latest BoE forecasts and their agents’ reports will increase attention on key data releases over the coming week or so (CPI, labour and retail sales data).
“The unexpected resilience of the UK economy in the face of Brexit is now going to be sorely tested. Early BoE withdrawal could add unnecessary stress for consumers into the election and as Brexit negotiations intensify.”
“Recent rebounds in both GBP and gilt yields reflect improving sentiment, but the UK yield spreads to US (and bunds) do not, as yet, support this recent move.”
“Topping risk. 1.30-1.32 should cap GBP/USD. Any new Brexit concerns or faltering of the UK consumer should see GBP slide back to the centre of an effective 1.20-1.32 range.”