UK: Growing market optimism over an eventual Brexit deal – Westpac

Westpac analysts note that for the UK, GBP has moved sharply higher as market optimism has grown over an eventual Brexit deal.

Key Quotes

“While we continue to harbour significant doubts over the effect that Brexit will have on the UK economy over the medium-to-long term, we expect the market's current exuberance to be sustained through early 2020 as a deal is delivered on January 31.”

“Consequently, we look for Sterling to appreciate further to USD1.33 at March 2020. Thereafter a lengthy period of stability is anticipated as the economy and markets process the changes taking place in the UK economy. We expect a Bank Rate cut in the June quarter. This will be in the midst of other central banks easing, and will help limit Sterling buying post the smooth Brexit outcome.”