UK: #MaysSpeechInFiveWords, not too helpful for sterling - ING

#MaysSpeechInFiveWords is currently trending on social media, points out Viraj Patel, Research Analyst at ING and suggests that its not too helpful for sterling.

Key Quotes

“For GBP markets, two channels of political uncertainty have arisen from the Tory Party conference: (1) more confusion over the government’s Brexit transition deal strategy – with reports that some senior ministers want it to last for more than two years versus Boris Johnson’s stringent ‘red lines’; and (2) ongoing questions over PM May’s leadership – where we note that odds of the Prime Minister leaving by year-end have risen in betting market (to around 30%). While neither are likely to actively weigh on GBP, we are wary that it may limit the effects of any BoE policy-driven upside in the near-term.”

“On that note, we have two BoE speakers to watch out for today – Chief Economist Haldane (18:30 BST) and arch-hawk McCafferty (1700 BST). The key phrase to watch out for is whether any future BoE hiking cycle is ‘more than just a withdrawal of stimulus’. With markets questioning the three BoE hikes priced in over a 2-3 year horizon, any signals along this line would support short-term UK rates and GBP. We look to fade any GBP/USD move down to 1.3150 and prefer a buy-on-dips strategy.”