#GBPUSD Medium / Long term Outlook and Positioning

The charts of the pair are currently as follows:

#GBPUSD H4

#GBPUSD Daily

#GBPUSD Weekly

The outlook for the coming quarters given by institutional research teams is as follows:

NAB

q1 1.30 q2 1.31 q3 1.31 q4 1.28

Barclays

q1 1.30 q2 1.32 q3 1.36 q4 1.46

CIBC

q1 1.31 q2 1.31 q3 1.34 q4 1.38

Danske

q1 1.29 q2 1.30 q3 1.38 q4 1.45

UBS

1.32 by the end of q4

Societe Generale

q1 1.29 q2 1.28 q3 1.29 q4 1.30

ScotiaBank

q1 1.35 q2 1.35 q3 1.37 q4 1.37

BNZ

q1 1.40 q2 1.41 q3 1.43 q4 1.44
Morgan Stanley
q1 1.25 q2 1.30 q3 1.27 q4 1.24

The pairs driver will be primarily #GBP and secondarily #USD.  The outlook of both has been discussed in other posts.  In brief, #GBP will be driven by the trade negotiations and the trade negotiations will be driven by domestic politics.  This factor cannot be predicted with relative safety.  However, the political survival or demise of populist pro Brexit politicians is dependent on the trade talk negotiations.  The economic consequences of Brexit are now clear to the British electorate and populist arguments will have a much lesser effect.  This is a the strongest incentive possible for such politicians as long as they will be able to present a soft Brexit in a way that they "will save face".

Trade talks are not expected to be smooth, hence volatility is expected to be high.

BoE is expected to be supportive to #GBP hiking the rates if necessary.

On the other side a political collapse and early elections are always a possibility.  The likely cause for that will be pro Brexit populist Tories.  In such case the Labor will be an unknown factor and by no means a soft Brexit alternative solution.

The projected trade zone for the coming quarters is the following:

Medium to long term positioning is long