• NAB’s positive view of GBP and forecast decline in AUD/GBP is in the immediate term (next few weeks) highly contingent on UK securing a two-year Brexit transition arrangement that would leave the UK’s treading arrangement with the rest of the EU largely unchanged through early 2021.  UK Prime Minister Theresa May continues to suggest agreement is close.
• If no deal agreed by the March 22 EU Summit, GBP is vulnerable to a significant downward correction.
• Further out, GBP strength is contingent on progress towards a relatively soft Brexit (with a shift of government tack in favour of remaining part of a Customs Union not out of the question, also being the opposition Labour Party’s stated position).
• Barring Brexit-related setbacks (always possible) the Bank of England is gearing up for a couple of rate rises this year (current Bank Rate 0.5%), the first as soon as May and no later than August barring a significant turn for the worse in UK economy or Brexit-related loss of business confidence and activity.

For further FX, Interest rate and Commodities information visit nab.com.au/nabfinancialmarkets