GBP: Limited upside potential – Rabobank

In view of Jane Foley, head of FX strategy at Rabobank, despite a fresh majority government, there is unlikely to be any respite from politics for the GBP in 2020.

Key Quotes

“PM Johnson's determination to use the threat of a no deal Brexit as a negotiating tactic will leave the pound open to bouts of selling pressure if the trade talks between the EU and the UK do not proceed well.”

“Although Johnson is of the view that a trade deal can be negotiated within a few months, Irish Taoiseach Varadkar has commented that it is possible that only the bones of a deal may be agreed by December. Political uncertainty is likely to act as a drag on growth and increase the risk of BoE rate cuts which should limit upside potential for the pound.”