GBP/USD should struggle to hold above 1.30 - Westpac

According to Tim Riddell, Research Analyst at Westpac, GBP/USD squeeze has raised range parameters (to 1.22-1.32), but it should struggle to hold above 1.30 before sliding towards the middle of its recent range.

Key Quotes

“PM May’s announcement of a snap general election as parliament returned from its Easter recess triggered a sharp covering of GBP shorts on the basis that May’s majority and mandate for Brexit negotiations and domestic reforms will be strengthened. A further budget will take place after the election.”

“Brexit may seem secondary in the near term, but the EU (ex-UK) Brexit summit on 29th April should provide some clarity on the EU’s negotiating stance. Political aspects may be dominant, but Brexit uncertainties remain. Should there be any faltering in retail sales, confidence and then 1Q GDP, the solid post-Brexit vote performance of the economy could show the fragility that so concerns the BoE and most economists.”