GBP/USD has declined below 1.15. A break under 1.1410 would set up a test of the December 1985 all-time low around 1.0520, economists at BBH report.

UK is stepping back from a Brexit confrontation with the EU

“GBP/USD remains on track to test the March 2020 low near 1.1410. After that is the December 1985 all-time low near 1.0520.”

“The UK will reportedly request an extension to the grace periods. This is welcome news as the last thing the UK needs right now is a trade war with its largest trading partner. That said, Brexit is now on the back burner but the matter is in no way resolved.” 

“Energy price caps will help limit inflation, which at the margin lessens the need for some amount of tightening. However, the cap is an artificial construct that doesn’t do anything to address the underlying supply-demand imbalance and comes at a fiscal cost.”