UK: Downside risks for economy greatly reduced - Westpac

Tim Riddell, Research Analyst at Westpac, suggests that downside risks for UK economy were greatly reduced by a steady, prudent, straight bat budget, aided by a shuffling of housing association debt into the private sector.

Key Quotes

“May also gained Cabinet support to align UK’s potential EU payments with EU-27’s “financial responsibility” which could be sufficient to unblock negotiations before the next round of meetings. Although this is a clear positive, it is still prone to cause rifts within the Tory Party and the very thorny issue of the Irish border must still be resolved.”

“Critical into the Christmas season, is whether pressure on households leads to a contraction of retail volumes. The slew of surveys over the coming week will be critical, as well as containing political risks, for sustaining GBP firmness seen in the past week.”

“GBP/USD is likely to struggle in front of 1.3750 and any Brexit stumble could reinstate downside pressures.”