According to the median forecast of a Reuters poll, between August 2-7, chance of no-deal Brexit jumped to 35%, up from 30% in July. And forecasts ranged from as low as 15% to as high as 75%. New UK Prime Minister Boris has been rather indecisive regarding his Brexit strategy. Except that, it’s trying to force through a exit on October 31, with or without a deal. And as Brexit uncertainty continues, economists expect GBP/USD to trade between 1.17 and 1.20 before the divorce data. That is, there is a bit more downside in the pair.
Regarding the economy, median chance of recession within a year was put at 35%, up from 30% in July. For the next two years, media chance of recession rose to 40%, up from 35%. However, 24 of 55 economists expected BoE to stand pat this year and next. On the one hand, buoyant wage growth makes it too early for call of a cut. Yet Brexit uncertainty, in whatever form, will make it hard to tighten in the foreseeable future. 12 of 55 economists expected a cut, while 19 expected a hike.
Separately, UK Foreign Minister Dominic Raab said in Washington, at a joint news conference with US Secretary of State Mike Pompeo, “We will manage the risks come what may. We will leave at the end of October and are determined to make a success of it.”
