One year after Britain voted to leave the European Union, GBP/USD is still lower. What’s next amid this uncertainty?
Here is their view, courtesy of eFXnews:
GBP: Maximum Uncertainty To Bite N-Term But Staying Bullish M-Term – Barclays
Barclays Capital FX Strategy Research is bearish on GBP in the near-term but remains bullish in the medium-term.
“The outcome of the UK general election has created challenges for Brexit negotiations and risks of no deal now look significantly higher.
“We expect the maximum uncertainty to bite in the coming quarter. From there, reduction in prevailing undervaluation and increased clarity around the negotiations support GBP appreciation,†Barclays argues.
In line with this view, Barclays Capital targets GBP/USD at 1.25 by the end of Q3, and at 1.29 by the end of the year.
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GBP: 1-Year Anniversary Since UK Brexits Into The Unknown; What’s Next? – BofAML
Bank of America Merrill Lynch FX Strategy Research notes this week marked the opening of the Brexit negotiations.
“The UK lost out in its demand for parallel negotiations, but re-emphasized its commitment to leaving the single market and the customs union. The two parties will meet every four weeks with the second round of negotiations on July 17th. Against this backdrop, the UK government continues to negotiate with the DUP on a confidence and supply agreement,†BofAML adds.Â
On the FX front, BofAML remains of the view that politics and the start of the Brexit negotiations will be the dominant near-term driver for GBP and keeps recommending long EUR/GBP exposure.
“As we highlighted in our post BoE write-up, a more hawkish tone to the MPC is unlikely to be a near-term game changer for GBP, as politics dominate. However, a more hawkish BoE could eventually become a more significant theme in the months ahead and, as we have argued in the past, for GBP as well,’ BofAML argues.
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