GBPUSD to Come Under Renewed Pressure on Brexit Concerns
GBP talking points:
- The UK government’s Brexit White Paper may be delayed until after an EU Summit at the end of June.
- With UK political worries rising again, this month’s mini rally in GBPUSD could well be reversed.
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Brexit concerns to hit GBPUSD
The British Pound looks likely to come under renewed pressure on Brexit concerns after its modest rally so far this month. A White Paper detailing the UK’s plans for Brexit now seems unlikely to be published until after an EU Summit on June 28/29 and that has focused the spotlight again on UK politics, likely leading to Sterling underperformance.
GBPUSD Price Chart, 30-Minute Timeframe (June 1 – 5, 2018)
The UK House of Commons will debate the EU Withdrawal Bill on June 12 and there is bound to be concern ahead of that debate that the Government could be defeated, potentially leading to new elections. That is extremely unlikely but GBPUSD trading will still likely be jittery, especially if a hard Brexit becomes more likely.
UK interest rates also in focus
Meanwhile, Silvana Tenreyro – a member of the Bank of England’s rate-setting monetary policy committee – has hinted that the UK can afford to leave rates on hold this month. That too will likely undermine GBPUSD, as will the government’s current political problems over the sale of a stake in Royal Bank of Scotland and controversial plans for a third runway at London’s Heathrow airport.
On the other hand, the UK economic outlook seems brighter after news Tuesday that retail sales recovered in May, according to a report by the British Retail Consortium. The purchasing managers' indexes for the UK manufacturing, construction and services sectors have all come in higher than expected too.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.