31 Jul

'Boris’s Brexit plan pressures pound' by Western Union

The British pound was heavily sold in July after Conservative Party maverick Boris Johnson was named Britain’s new prime minister.

The market’s concerns about a hard Brexit have been the major driver of the British pound so far this year

PM Johnson’s apparent willingness to deliver Brexit on 31 October without a deal has escalated the selling pressure on the GBPAUD. The pair fell to 2019 lows last month (source: Reuters).

As markets adjust to the new reality that means a “no-deal” Brexit is more likely, volatility has picked up, and this means that the GBP – and the GBPAUD – is liable to greater price swings. 

Further worries about a potential “no deal” Brexit could pressure the British pound over the next few months.

However, any resolution to the Brexit issue could see the British pound regain some of its losses and cause the GBPAUD to jump.  

Our view is the Brexit woes will continue to weigh on the British pound. Our 12-month target is 1.6666.

The market view, as reported in the Reuters FX poll published on 4 July 2019, has a 12-month target of 1.8333. 

Western Union Business Solutions is a business unit of The Western Union Company. In Australia, services are provided by Western Union Business Solutions (Australia) Pty Limited (AFSL 404092) (‘WUBS’). WUBS has based the opinions expressed above on information generally available to the public such opinions are not intended as advice.
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