GBP

Due to market views that monetary policy in the Eurozone and UK were on track to diverge over the next year, the Euro to Pound (EUR/GBP) exchange rate fell last […]

Although yesterday’s fluctuations required some adjustments, the main assumption remained unchanged.

The cable is continuing to trade in a symmetrical triangle pattern whose upper trend line simultaneously represents the slope of a larger falling wedge formation.

From dominant pattern’s perspective the breakout should happen in southern direction towards support zone located between the 1.3338 and 1.3331 marks.

Analysts warned that UK’s economy will most likely downgrade this year. In your opinion, how long will it take for the UK economy to stabilise?

I would suggest that it depends on exactly what we mean by stabilise; in my opinion, growth is rather to be stable for the next few quarters, but it will still hold at a relatively low level. If we look at the GDP growth in the second quarter, it was 0.3%, slightly higher than in the first quarter. My current view is that the GDP will probably hold at the same level during the H2 of this year and in 2018 as well. Growth will be relatively stable, but again, stable at a relatively low level.
If you ask me when do we think that growth will be turned to a certain trend rate of growth, which is probably closer to 0.5% a quarter, then we do not think that this is likely to happen anytime soon; maybe in the H2 of 2018 at the earliest.

Craig Reeves, CEO and founder of Prestige Asset Management wrote the following article.
Thursday the 24th of August 2017, Craig is visiting Zurich. If you are a qualified investor and would like to meet him, please let us know and send us a message.

From the growth point of view, Brexit can affect the economy in two ways. In the near term, uncertainty from Brexit and rising inflation from the reduction in Sterling trade since the vote could cause a modest demand-side shock. But that effect has been much smaller than expected. In fact, the economy has outperformed the non-Brexit scenarios. Of course, we do not know how the economy would have performed had the UK not voted to leave. That seems to be an absence of the short-term demand-side shock. I am confident that the UK can continue to enjoy a broad-base expansion over the next couple of years. I see probably 2% real GDP growth this year followed by 1.7% next year.

According to latest reports, a slowdown in the housing market and a weakness in the construction industry only worsened amid higher costs. In your point of view, should we expect a further decrease in the UK economy? Why?

Our base case scenario is that we are expecting a slowdown in the UK economy in 2017. If we ask what has been propping the UK economy up since Brexit, the answer would be the consumer spending story; we have seen consumption being fairly resilient since Brexit. On the other hand, we have seen investment taper a little bit less, therefore, what has been driving the UK economy is really consumer spending.

Though, at this point, the outlook looks pretty bleak, especially if we take into account the fact that we have got a squeeze in household consumer incomes, coming from higher fuel prices, higher inflation, and a lack of wage inflation. Real incomes are being squeezed, which in theory leads to weaker consumer spending power. Thus, the channel which has been propping up the UK growth is likely to weaken a little bit going into 2017.

British Prime Minister Theresa May is expected to say on Tuesday that she favours a clean break from the European Union, dismissing a "half-in, half-out" Brexit deal with Brussels.

In a highly anticipated speech, May is likely to give further signals that Britain is heading to what analysts call a "hard" Brexit.
It is thought the Prime Minister is ready to take Britain out of the European single market and customs union, though it remained unclear whether she will give a definitive answer on the question.

Bank of England is willing to tolerate above-target inflation to support growth and employment after ‘Brexit’, Governor Mark Carney said Friday.
"Our job is not to target the exchange rate, our job is to target inflation," he said during a public meeting in Nottingham.