GBP: Downside risks hardening - RBS

Research Team at RBS, believes that the Sterling’s increasing inability to rally on robust UK data illustrates that market participants are shifting their focus to the UK’s medium-term challenges centred on the country’s decision to leave the European Union.

Key Quotes 

“Investment trends, price inflation and fiscal policy, along with how the exit negotiations evolve will all be important Sterling drivers over the months to come. The global fixed income duration selloff and higher long-end yields further constrain the government’s scope to loosen fiscal policy, something that could have supported GBP. This leaves us expecting declines in trade weighted sterling in the months ahead.”