• GBP searching for direction and remains in consolidation range from 1.2633-1.2820 against USD
  • Brexit negotiations began today, with the “divorce terms” the first item on the agenda
  • Carney speech tomorrow morning at 9:30 (BST) could have an impact on GBP

The pound has been one of the most volatile currencies this month with the shock outcome of the UK election and unexpected dissent to the BoE decision seeing large swings. It’s a quiet week ahead in terms of data for the Pound but with Brexit negotiations beginning today and several speeches scheduled from BoE members in the coming days, with the biggest of them all Carney’s Mansion house speech which will be released tomorrow morning at 9:30 (BST), the question is where next for GBP?

 This morning Britan and the EU launched the first round of formal Brexit talks as they sought to demonstrate a “constructive” and “positive” start to the negotiations regaridng the terms of Brexit. Michel Barnier, the EU’s chief negotiator, welcomed his counterpart David Davis for a day of preliminary discussions in the European Commission headquarters. The talks are expected to focus on practical arrangements for negotiations, including dates for discussions going forward and the agenda for the next meeting. The EU has insisted that before terms of the future agreement can be discussed a “divorce bill” which the UK will have to pay and what happens with UK nationals living in the EU and EU nationals in the UK will need to be confirmed.

 Elsewhere BoE member Forbes, one of the dissenters at last week’s decision has just conducted an interview with Bloomberg. Selected quotes are as follows:

  • CPI pickup isn’t just temporary currency effect
  • UK CPI will probably rise above 3%
  • Expects wage growth to pick up
  • BOE is underestimating inflation pressures
  • Sees costs to looking through current higher inflation
  • Exports will help “keep GDP growth around potential, or slightly above potential, over the next couple of years.”

However considering that last week’s meeting was the final time Forbes will vote on rates her words lack some punch in determining future monetary policy. 

The pound has lacked any clear direction today with an early move against the US dollar being met with some selling pressure after the buck rose on Dudley’s comments.

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 The GBPUSD remains in the range from 1.2633-1.2820 that has contained price in a period of consolidation following the drop on the UK election exit poll