Pound: Stronger UK growth and reverse-Brexit risk – MUFG
Lee Hardman at MUFG reports the Pound is consolidating near year-to-date lows against the Dollar despite resilient UK growth, with Q1 and Q2 GDP both revised higher and BoE staff upgrading Q3 forecasts.
The British pound is experiencing consolidation near year-to-date lows against the US dollar, according to MUFG analyst Lee Hardman. Despite resilient UK growth, which has led to revised upward GDP figures for Q1 and Q2, the pound has struggled. The Bank of England's hawkish comments and Prime Minister Andy Burnham's openness to closer EU ties have raised concerns about a potential reverse-Brexit trade for the pound.
Revised growth forecasts for Q3 have been raised to 0.4% from the previous 0.1%, indicating that stronger growth may prompt the Bank of England to tighten policy if higher energy prices persist. The risk outlook for inflation is currently tilted to the upside.
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