British Pound Rate Talking Points
GBP/USD[1] trades to fresh monthly lows, with U.K. data prints doing little to influence the British Pound[2], and the Brexit negotiations may continue to drag on the Pound Dollar exchange rate as Prime Minister Theresa May struggles to secure a deal.
Fundamental Forecast for British Pound: Neutral
The British Pound may continue to get battered even though the economic docket stands fairly light for the last full week of May amid the renewed the threat for a ‘hard Brexit[3].’
Headlines surrounding Brexit may continue to shake up the near-term outlook for GBP/USD as Prime Minister May lacks support for the Withdrawal Agreement Bill, and the ongoing rift between U.K. lawmakers may keep the Bank of England (BoE) on the sidelines even though the Consumer Price Index (CPI) show the reading for inflation climbing to 2.1% from 1.9% per annum in March.
In turn, the British Pound stands at risk of facing headwinds ahead of the next BoE meeting on June 20 as the Monetary Policy Committee (MPC) insists that ‘the economic outlook will continue to depend significantly on the nature and timing of EU withdrawal,’ but the pickup in GBP/USD volatility continues to shake up market participation, with retail sentiment still stretched going into the end of the month.
The IG Client Sentiment Report[4] shows 79.8% of traders are net-long GBP/USD compared to 81.7% earlier this week, with the ratio of traders long to short at 3.95 to 1. Keep in mind, traders have remained net-long since
