GBP: Brexit Round 3 Showdown Weighing On GBP; What’s Next? – BTMU

The pound is under pressure, unable to gain ground against the dollar when the greenback is falling. EUR/GBP is getting closer to parity. What’s next?

Here is their view, courtesy of eFXnews:

BTMU FX Strategy Research sees some similarities between GBP and USD currently with both currencies languishing to a degree on political uncertainties that are outweighing positive signs in terms of the outlook for economic growth.

“Round 3 of Brexit negotiations will commence next week and there is increasing signs of a potential clash with the UK showing signs of discomfort over the oft-articulated EU insistence of a strict sequencing of negotiations with ‘divorce’ issues being dealt with prior to moving onto a transition deal and the new UK-EU trading relationship.

In that regard, BTMU remains not convinced that GBP will remain under downward pressure due to political uncertainties ahead of a fresh round of Brexit negotiations and the return of parliament after the summer recess.

“The pound is down 3% so far in August, the second worst performing G10 currency (only NZD worse) and we would not be surprised to see that performance turn around given the continued favourable flow of economic data,” BTMU argues.