GBP on a shaky ground – ANZ
For sterling, it is easy to understand the negative sentiment, and Westminster is not helping what is a fragile political situation as in short term, sterling is vulnerable, and ahead of the EU summit in December, there will be intense scrutiny on the Brexit talks, according to analysts at ANZ.
“What is needed to progress to Phase 2 negotiations, however, is agreement on the methodology for calculating the UK’s liability, not actually a number. That would represent “significant progress”, whilst it is also strongly rumoured that PM May is willing to offer considerably more than EUR20bn.”
“For the time being, the market may favour pushing the downside for the pound. That, nevertheless, should come with a large caveat: an improvement in the climate surrounding Brexit negotiations will expose a material flaw in the underlying assumptions under which GBP is being sold.”