GBP’s correctiverebound. Finally, the anticipated GBP upward correction has set in, triggered by the UK High Court clearing the way for the Parliament to vote on the exit agreement once negotiations with the EU are completed. GBP has seen its strongest gain since ‘hard Brexit’ fears gripped markets a couple of weeks ago. GBPUSD has potential to 1.2650, but investors may soon have to deal with increasinguncertainties again.
Parliament still does nothave the right to vote on triggering article 50 which is likely to happen in spring starting a two year period of intense negotiations between the UK and the EU. Investment uncertainties will remain high,not boding well for the supply side of the UK economy and suggesting the economy may enter an underperforming position within the G10. Hence, GBPUSD near 1.2650 offers a selling opportunity targeting 1.15 which we think may be reached in Q1.