GBP: Technical condition significantly superior to fundamental backdrop - BBH

Analysts at BBH suggest that Sterling's technical condition appears significantly superior to its fundamental backdrop as MACDs and Slow Stochastics are poised to cross higher for sterling.  

Key Quotes

“The EU has the stronger hand in Brexit negotiations.  The loss of the Tory majority may cost the government GBP 2 bln of additional infrastructure and NHS spending to get the support of the DUP, with which it agrees with on very few issues.  The Lib-Dems and Labour are seeking to frustrate May's ability to govern as if the Tories had a majority.  On top of this, the central bank is as divided as it has been under Carney, though some may recall that Carney's predecessor was out-voted more than once.”

“The MACDs and Slow Stochastics are poised to cross higher for sterling.  Initial resistance is seen in the $1.2800-$1.2815 area.  What looks like a resilient sterling is more a case of a weak dollar.  The euro has risen around 5.5% against the sterling since mid-May and near GBP0.8800 is within about 0.5% of the year's high.   On a trade-weighted basis, sterling is off 2% this month.  We remain bearish sterling on a medium-term view.”