French Elections: GBP will provide protection if Le Pen wins

French Elections: GBP will provide protection if Le Pen wins

13 April 2017, 04:37
Jiming Huang
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Another currency deeply affected by speculations has been the GBP, on which we remain pointedly constructive. First we suspect that the GBP will provide a level of protection from a surprise Marine Le Pen outcome in the French elections. Secondly, inflation continues to pick up in the UK further adding to the debate over BoE monetary policy strategy. While real-estate inflations has eased marginally (reflecting softer house price growth and weaker ONS data), it remains at a decent pace.

Yesterday's UK PPI data surprised to the upside as input prices rose 17.9% y/y. Headline CPI rose 0.4% falling from the elevated 0.7% but above the expected 0.3% (annual remained steady at 2.3%). Core CPI also fell to 1.8% from 2.0%. Yet despite the easing, there is enough price pressure in the system to force the BoE to discuss a policy stance. Just the hint of tightening policy in the UK will keep GBP supported.


(By Peter Rosenstreich)

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