An expected Tory general election win favours GBP strengthening as it delivers political certainty even if under BJ implies a hard Brexit outcome is more probable.

Fundamentals - GDP

Extreme Brexit uncertainty is translating into business and economic uncertainty so it should not come as much surprise that the UK economy has slowed down against the recent trend of about +2% per annum. This year has seen growth slow to 0.5% for Q1, -0.2% for Q2, to currently stand on a weak +0.3% for the year that has had the remainer mainstream press collectively pronouncing that the UK economy is on the brink of a Brexit recession.

Yes 0.3% is bad, and we may even get a technical recession i.e. two quarters of marginal negative growth. But I suspect that the UK economy will rebound strongly during the remainder of this year, especially if BJ enacts his recent end of austerity spending pledges of pumping upwards of £20 billion into the UK economy, where even the expectations of are enough to galvanise economic activity in anticipation of stimulus spending. So I don't expect a recession this year. Instead Q3 and Q4 should show increasing positive growth whilst 2021 depends on what happens to the global economy.

So just as the Q2 0.2% dip was accompanied with sterling weakness, so should a stronger economy over the next few months (Q3,Q4 data) be accompanied with sterling strength which implies GBP trading north of 1.30.

The rest of this analysis has first been made available to Patrons who support my work: https://www.patreon.com/posts/british-pound-vs-29840414

Westminister BrExit Chaos Puts Britain into a Pre-Civil War State
Boris Johnson a Crippled Prime Minister
Boris Johnson's "Do or Die, Dead in a Ditch" Brexit Strategy
General Election 2019 - Opinion Polls
UK General Election Forecast 2019 - Betting Market Odds
British Pound vs Brexit Chaos
British Pound Fundamental Analysis
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GBP Long-term Analysis
GBP Trend Analysis
British Pound GBP Forecast Conclusion

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By Nadeem Walayat

http://www.marketoracle.co.uk

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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