UK: Brexit and the vulnerability of May’s Govt. pose major risks - Westpac

Two ratings agencies stated this week what economists/analysts have warned – Brexit and the vulnerability of May’s Govt. pose major risks to UK as the Great Repeal Bill enters Parliament, according to Tim Riddell, Research Analyst at Westpac.

Key Quotes

“Although some readings of UK economy show resilience, the key service and retail sectors are faltering and housing is moderating. Labour data highlight the policy conundrum for BoE’s MPC. Employment is hitting record levels, unemployment is below pre-crisis levels, but low wage growth and high CPI are pressuring households. A housing sector slide would add to these concerns. This week Broadbent highlighted the BoE’s Brexit concerns and his view that there is no imminent need to alter policy. CPI is of increasing but conflicting interest.”

“GBP faltered at testing the upper bounds of its effective 1.24-1.30 range and now is at risk of retesting 1.24-1.25 support.”