Sterling has had a rough month, particularly against the euro. A big part of that has been driven by euro strength … There’s also the fact that recent data suggests the Brexit chickens may finally be coming home to roost for the economy, with lukewarm consumer spending and flat business investment. It all adds up to a lot of uncertainty, which of course translates to rich pickings for sterling bears.
Politics and growth remain the two key considerations for the rest of the year. How quickly Brexit negotiations move from divorce terms to the future relationship between the EU and UK stands out as a key issue, as delays risk further dents to business investment.
High frequency data, especially retail sales, will also be worth picking apart with a fine-tooth comb as the last couple of months have shown some recovery, but real wages remain in contraction and it’s unclear how consumers will respond.