Brexit masks significant GBP undervaluation - ANZ

According to Brian Martin, analyst at ANZ, UK economy is still wrestling with enormous Brexit related political uncertainty as competing political factions advocate different visions of the UK’s future.

Key Quotes

“Sterling’s near term path twists with the anticipated solution to Brexit.”

“However, the obsession with Brexit is masking a very solid performance by the UK economy. Inflation is at target, the public finances have improved dramatically and the labour market is at its strongest in 45 years.”

“Fiscal policy is poised to turn expansionary and a pragmatic Brexit policy will require measures to support productivity and potential growth. Based on a soft Brexit, which Parliament supports, interest rates will rise.”

“An expansionary fiscal and tighter monetary mix provide robust arguments for a sustained appreciation in sterling once Brexit uncertainty is resolved.”