GBP/USD Monthly Fundamental Forecast – July 2016

The GBP/USD had on horrible month after the UK referendum shocked the world and now politicians are trying to figure out what to do as the Brexit camp won and is totally unprepared. David Cameron resigned leaving the UK confused. The pound fell 2000 points immediately after the vote and is trading now at 1.3310 down 7.76% for the month and off almost 10% on a YTD basis.

The only objective this month will be to find a new functional government. Conservative MP Daniel Kawczynski says he is backing Michael Gove as party leader, believing he as “a very strong chance” of getting into the ballot for the final two contenders.

He says the justice secretary is the only leadership candidate who spent any time north of the border during the EU referendum campaign, which he claims is important with the possibility of the SNP “foisting” a second independence referendum on Scotland.

He adds that Andrea Leadsom is “also a very credible candidate”, having played “a blinding role” during the campaign, “really showing leadership”.

However, he says he believes Mrs. Leadsom needs to be tested further in a role such as chancellor before becoming prime minister.

Meanwhile, Therese Coffey, who is backing Theresa May, says she is looking for a candidate who is “not playing games”.

She says Mrs. May’s experience as home secretary and her qualities of being assiduous and tireless in her work to make things better for this country and to make people safe were needed to bring the country together.

When do Brexit talks start?

Not until a new Conservative leader is elected, who will replace David Cameron as prime minister by October.

Then it will be up to the new leader to decide when to trigger the EU’s Article 50, the procedure for withdrawing from the EU.

Article 50 sets a two-year deadline for withdrawal from the EU. But the detailed negotiations on the UK’s future relations with the EU could last years longer.

Our forecast for July 2016 1.3150 – 1.33.75

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