GBP: Consolidating the losses - BBH

Sterling spent last week consolidating the losses seen in the wake of news that the Tories lost their majority, explains the analysis team at BBH.

Key Quotes

“A narrative of a soft Brexit post-election seems on a weak foundation.   The UK's ask is contradictory from the EU's point of view.  It cannot abandon EU rules on immigration and reasonably expect to have the privileges of the single market.  This is the red line beneath the proclamations and declarations.”

“Brexit negotiation begins next week.  The first set of issues is the terms of the amputation. This will mostly revolve around how much money the UK needs to pay to relieve its responsibilities and commitments.  The technical indicators are not generating a strong signal which may suggest range-affair between $1.2650 and $1.2850.  When all is said and done, sterling continues to be resilient against the dollar.  We suspect this reflects the dollar's poor performance.  The euro made news highs for the year against sterling (~GBP0.8865) early last week.”