GBP: Elections will dominate over the coming week - Westpac

Tim Riddell, Research Analyst at Westpac, explains that PMI and housing surveys may be influential but the election will dominate over the coming week as the first hard data in June (Apr. ind. prod. and trade on 9 th) are released after the election (8th).

Key Quotes

“The narrowing of the Conservative lead in polls impacted GBP most notably in EUR/GBP. This will remain the most sensitive currency pair into the actual election, especially given EUR’s recent strength more generally and the postelection focus upon Brexit negotiations.”

“Post election focus should also quickly shift towards the 15th June MPC meeting and how the election impacts confidence, particularly around both housing and retail sectors.”

“With political tension to the fore, gains in EUR/GBP seem stretched and a swing in support back to the Tories would likely trigger EUR/GBP pullbacks through 0.86. GBP/USD gains should still falter in the upper end of its broad 1.20-1.32 range.”