NAB Research discusses GBP outlook in light of the latest Brexit developments.
"Although cross-party talks have shown little progress, GBP has been relatively stable at around 1.28-1.30 (absent the gentle rise in the USD). GBP should continue to remain relatively supported given Parliament opposes a no-deal Brexit and the indicative votes in late March showed a greater preference towards a Customs Unionlike deal and/or a 2nd Referendum than any alternative. If cross-party talks fail, then PM May will try to steer her party towards backing her original deal and use the threat of Parliament’s softer-Brexit as leverage (her deal may be put before Parliament again this week). Failing that, Parliament would resume trying to find a consensus. Either way, the UK has until October 31 to find a palatable deal so the lack of imminent progress has not weighed too heavily on GBP (nor should it)," NAB notes.
"A possible air-pocket though for GBP is the upcoming EU Election on May 23 which will be taken as a key test of the electorates’ appetite for a soft-Brexit. The performance of Farage’s Brexit Party will be closely watched given it favours a hard-Brexit, as will those advocating a soft-Brexit or explicitly a Remain or 2nd Referendum (Labour, Green, Lib Dems, SNP and Change UK). Polling puts the Brexit Party at 29%, Tory at 14% and those who favour a soft/no-Brexit at 54%. Voter turnout will be key," NAB adds.