GBP outlook still looks constructive – TDS
|FX Strategists at TD Securities noted the stance on the Sterling remains constructive in the medium term.
Key Quotes
“The UK heads towards an 8 June election with household spending & wage growth slowing and data surprises deteriorating. While 17Q1 growth is likely to post another solid gain, there are risks on the horizon that will keep the BoE on pause for the duration of this year and next as it appears more and more likely that exchange rate depreciation is responsible for the surge in inflation (something that the MPC can tolerate)”.
“Political risks remain on the agenda as the UK heads to an early election, but these are now supportive for the GBP as Brexit negotiations get off to a (slow) start. We think sterling’s path will ultimately remain governed by the UK’s fundamentals. These may be turning less constructive but we still see scope for extended GBP appreciation against several key G10 crosses”.
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