The pound is on the move higher after the elections announcement. After the initial move, it consolidated its gains. What’s next?
Here is their view, courtesy of eFXnews:
NAB FX Strategy Research notes that GBP has surged since the announcement of early UK elections.
In that regard, NAB argues that while there are several reasons for the GBP outperformance, they must all be considered in the context of the near-record volume of outstanding short positions in the currency.
What’s next?
NAB looks for the peak in GBP to come at or around the time of the General Election of June 8th and for the slow and steady grind of Brexit news and negotiations then to take its toll on the currency through the second half of 2017.
“A better political backdrop at home doesn’t translate straight across into an improved economic outlook and the GBP’s better near-term performance is not expected to last,” NAB adds.
In line with this view, NAB targets GBP/USD at 1.31 by end of June, 1.29 by end of October, and 1.27 by end of the year.
GBP/USD is trading circa 1.2846 as of writing
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