GBP under pressure - BBH

Sterling was among the poorest performing major currencies last week, losing about 1.2% against the dollar as the main driver was Brexit not economic data or expectations for the Bank of England, points out the research team at BBH.

Key Quotes

“Prime Minister May's position is increasingly challenged.  Some Tory rebels reportedly are supporting an amendment to a trade bill that requires her to negotiate remaining in the customs union.  Other Tories have lobbied hard for a quick, clean and decisive break.  The EU itself has provided a draft agreement which May summarily rejected.”  

“With the latest decline, sterling tested the 50% retracement (~$1.3690) of the rally since early November.   The technical indicators warn of downside risks, and the next retracement objective is near $1.3540.  However, sterling closed firmly ahead of the weekend, and a move above $1.3850 would begin repairing the technical damage.” 

“The weak dollar environment may mask sterling's weakness.  The euro rallied strongly and reached its best level against sterling in more than three months.  It finished the week a few ticks above the upper Bollinger Band.  The technical indicators suggest that this may be a breakout, in which case GBP0.9000 is the next target, but further out, the potential is toward the high from, last August near GBP0.9300.”