汇丰银行-全球-宏观策略-货币展望：英国退欧时间更长英镑走强-2019.4-50页.pdf

Disclosures&Disclaimer:This report must be read with the disclosures and the analyst certifications inthe Disclosure appendix,and with the Disclaimer,which forms part of it.CurrenciesGlobalApril 2019By:HSBC FX StrategyCurrency OutlookBrexit longer,GBP strongerThe delay of a potential No Deal Brexit scenario should see GBP-USD move higher.The possibility of a Deal or No Brexit outcome should be assigned a higher probability by the market.However,the rise in GBP may take time.Concerns about domestic political uncertainty and the underlying fragility of the UK economy may limit some of the upside.A fiscal game changer for FX We have been committed USD bulls for a while now,yet we are always looking to challenge that view.Thus,we ask what might happen if other countries follow the example of the US in 2018 and embark on major fiscal expansion.We believe robust fiscal stimulus would be positive for the currency in question.1 Currencies Global April 2019 Brexit longer,GBP stronger(pg 3)The delay of a potential No Deal scenario should see GBP-USD move higher.The most negative potential scenario for GBP has now been stopped in the near-term,while the more positive GBP outcomes of a Deal or No Brexit should be assigned a higher probability by the market.However,the rise in GBP may take time.Concerns about domestic political uncertainty and the underlying fragility of the UK economy may limit some of the upside for GBP.We also feature our economists take on the extension in which they highlight these economic weaknesses.A fiscal game changer for FX(pg 10)We have been committed USD bulls for a while now,yet we are always looking to challenge that view.In this piece we ask what might happen if other countries follow the example of the US in 2018 and embark on major fiscal expansion.Fiscal easing carries contradictory implications for a currency:the cyclical positives vs the structural negatives.We saw from the USD in 2018 that cyclical elements turned out to be dominant.We see no reason to expect things would be different were other countries to deliver a robust fiscal stimulus.Thus,were there to be significant fiscal expansion in a given economy,we would likely become more optimistic on the currency in question.JPY:Taxing times(pg 19)Japan is scheduled to hike the consumption tax on 1 October.If the tax hike does materialise,we believe it will be negative for the JPY due to the impact of slower growth.However,we think it is too early to change our stronger JPY forecast as there is a possibility of a delay to the tax hike.AUD&NZD:Carry commodity divergence(pg 20)Bullish commodity price arguments have gained little traction for the AUD and the NZD in an environment of slowing global growth and amid an ongoing drag from interest rate differentials.Our base case is for further depreciation but this would become more difficult to achieve if the terms of trade were to strengthen much further,particularly if triggered by a China growth rebound.Summary Currencies Global April 2019 2 Key events Date Event 24 April BoC rate announcement 25 April Riksbank rate announcement BoJ rate announcement 1 May 2 May 7 May 8 May 9 May FOMC rate announcement BoE rate announcement RBA rate announcement RBNZ rate announcement Norges Bank rate announcement Source:HSBC Central Bank policy rate forecasts(%)Last Q2 2019(f)Q4 2019(f)USD 2.25-2.50 2.25-2.50 2.25-2.50 EUR 0.00/-0.40 0.00/-0.40 0.00/-0.40 JPY-0.10-0.10-0.10 GBP 0.75 0.75 0.75 Source:HSBC forecasts for Fed funds,Refi rate/Deposit rate,Overnight Call rate and Base rate Consensus forecasts for key currencies vs USD 3 months 12 months EUR 1.140 1.171 JPY 110.1 108.6 GBP 1.327 1.364 CAD 1.322 1.305 AUD 0.707 0.719 NZD 0.673 0.673 Source:Consensus Economics Foreign Exchange Forecasts April 2019 3 Currencies Global April 2019 Three is(still)the magic number The extension of Article 50 negotiations creates more time but does not change the fact that Brexit must,ultimately,end with one of three outcomes:No Deal,Deal or No Brexit.We have seen GBP as reflecting the weighted probability of these different outcomes for some time,and believe this framework still holds.We have explained how we see GBP-USD moving to 1.10 in the No Deal scenario,1.45 in the Deal scenario and 1.55 in the No Brexit scenario(see GBP gets our vote,16 January 2019).Our forecast for GBP-USD has been based around applying an equally weighted probability to each scenario.This puts our base case forecast for GBP-USD at 1.37(Chart 1).With GBP-USD having been trading in the low 1.30s,it suggests that the FX market had been implicitly applying a higher probability to No Deal than the bookmakers for example,which have seen No Deal trading at around a 20%probability in recent months.This should change and the FX market should start to price in a lower likelihood of No Deal both in the near-term and even further out if the market views the 31 October deadline as potentially moveable.By default the market should also assign a higher probability to a Deal being passed,or even of the UK revoking Article 50 and not leaving the EU.This should mechanically push GBP higher.Brexit longer,GBP stronger An extension of Article 50 negotiations to the end of October buys time but doesnt change the underlying framework for GBP The near-term risk of No Deal has clearly fallen which must be seen as a positive for sterling but GBPs rise may be delayed if domestic political uncertainty such as an early election becomes more prevalent 1.HSBCs GBP-USD forecast based on different Brexit scenarios Source:HSBC Currencies Global April 2019 4 The extension does,however,create time for different potential pathways towards one of these eventual endings to emerge,some of which may limit the upside for GBP.With Theresa Mays current Withdrawal Agreement having failed to gain support in the House of Commons,and with seemingly little movement towards a cross-party agreement,one rising risk is that an early general election could be voted for in Parliament.The FX market would then have to balance the upside potential for GBP from the extension against the risk of change in government.The challenges for the currency could come from both sides of the political spectrum.Domestic political uncertainty on all sides A change in the domestic leadership,whether through a change in the leader of the Conservative party or from the election of a Labour government,could create political challenges for GBP regardless of which side of the political spectrum we focus on.On the Conservative side,Theresa May has previously made assurances to her party that she would not lead them into another election,having previously survived a no-confidence vote in her leadership.Given the way the Conservative party leadership process works with the final vote on the leader being amongst grass-roots party members,who favour a more Eurosceptic stance(YouGov,4 January 2019),it seems likely that the next leader would come from the more Eurosceptic wing of the party.Indeed,the bookmakers list the current front runners for the role as Boris Johnson,Michael Gove,Jeremy Hunt,Dominic Raab and Sajid Javid.Gove was a leading figure in the Leave campaign,Johnson and Raab have advocated leaving the EU without a deal,while even former Remain supporters Hunt and Javid have leaned towards a firmer line on leaving in the last six months(Telegraph 15 December 2018,BBC 3 February 2019).Under a new Conservative leader,negotiations with the EU could be even more strained than under May and the risk of a No Deal albeit in October could start to firm up again.On the Labour side,it is likely that the FX market would treat a Jeremy Corbyn-led government with some scepticism.The nature of many of the policies outlined by the Labour party in the past nationalisation of key industries,and higher taxes and government spending have tended to be currency negative.It is also not 100%clear what type of Brexit the Labour party favours.So negotiations with the EU may end up going back to square one if Labour were to command a majority,or were to lead some form of coalition,in the House of Commons.The uncertainty around which party and which Prime Minister might lead the country following an election is in some ways exacerbated by the fact the current polling does not clearly suggest that a general election would even lead to a significant change in the party make-up of the House of Commons.So even after the nation goes the polling booths,the UK could end up in exactly the same place as it is now,needing to find a way to negotiate No Deal,Deal or No Brexit with the clock ticking again,this time until 31 October.Cyclical factors unlikely to take centre stage The extension could also give GBP time to focus on cyclical rather than political factors.In 2017,the notification of Article 50 started a two year period of negotiations,the duration of which was long enough for GBP to largely ignore political developments for much of that year and focus on cyclical factors instead.Political factors only started to matter more meaningfully in 2018.Chart 2,showing the correlation of GBP-USD with UK-US rate differentials,outline this changing relationship.We would suggest that the latest six-month extension is unlikely to be long enough to push political factors to the back of the queue as in 2017.But it is worth considering nonetheless.5 Currencies Global April 2019 2.GBP has swung between political and cyclical driver in recent years 0.00.10.20.30.40.50.60.70.00.10.20.30.40.50.60.7Jan-11Jan-12Jan-13Jan-14Jan-15Jan-16Jan-17Jan-18Jan-19Correlation between GBP-USD and 1y1y rate differential:200dPolitics dominantCyclical factors gain tractionPolitics dominantCyclical dominant Source:Bloomberg,HSBC Even if cyclical drivers became more dominant again,it is not clear how much upside this would create for GBP.The forward rates market is currently not expecting any change in Bank of England rate over the next year.Chart 3 suggests that even if the relationship between rate expectations and GBP-USD were to strengthen,the currency would only face significant upside pressure if the rates market were to start pricing in hikes.As things stand,our economists expect no change in rates,citing the continued uncertainty,sluggish growth,subdued core inflation and an increasingly dovish global monetary policy environment(see our economists note on the next page).3.Even if rates start to drive GBP,hikes would have to be priced in for sterling to rally 1.201.251.301.351.401.45-100102030405060Jan-17Jul-17Jan-18Jul-18Jan-19Rate hikes priced for:1y,bp,LHSGBP-USD,RHS Source:Bloomberg,HSBC Conclusion:GBP to rise with delay The delay of a potential No Deal scenario should see GBP-USD move higher.The most negative potential scenario for GBP has now been stopped in the near-term,while the more positive GBP outcomes of a Deal or No Brexit should be assigned a higher probability by the market.However,the rise in GBP may take time.Concerns about domestic political uncertainty and the underlying fragility of the UK economy may limit some of the upside for GBP.Our framework suggests an equally weighted outcome of Brexit probabilities should see GBP-USD trade at 1.37.But the rising downside risks from domestic politics may delay the pace at which the market moves there.Currencies Global April 2019 6 The UK agrees to remain.for a little longer New Exit Day is 31 October 2019 The UK has accepted the EUs offer to delay Brexit until 31 October 2019,with the option to leave sooner if it ratifies the Withdrawal Agreement before that date.Specifically,the European Council statement says that the withdrawal should take place on the first day of the month following the completion of the ratification procedures or on 1 November 2019,whichever is the earliest.As part of the agreement,the UK will participate in European parliamentary elections in May,and if the UK fails to live up to this obligation,the extension should cease on 31 May 2019”.So,there is a new cliff edge date in theory,though in practice,the UK has already said it is prepared to participate in the May elections.The European Council has also reiterated that the withdrawal agreement will not be re-opened.So,the UK retains the choice to take it with its provisions for the Northern Irish backstop or leave it,meaning either revoking Article 50 or leaving with no deal.In the European Councils statement,it also insisted that the UK take the delay in good faith,and that the extension could not be allowed to undermine the regular functioning of the Union and its institutions.Instead,the statement noted that the United Kingdom shall facilitate the achievement of the Unions tasks and shall refrain from any measure which could jeopardise the attainment of the Unions objectives,in particular when participating in the decision-making processes of the Union.No deal risk has recededthough it remains possible Despite a lot of talk on both sides about being prepared for a no deal Brexit,it has,on two occasions,not been allowed to happen.It is still possible that the UK could leave with no deal next year,particularly if a new leader took over.However,that leader would still face the difficult parliamentary arithmetic that has caused such problems for Prime Minister Theresa May,unless they took the country into fresh elections and managed to secure a majority.Brexit delayed again The UK and EU have agreed to delay Brexit until 31 October 2019 unless the withdrawal agreement is passed before then If Theresa May and Jeremy Corbyn cannot agree on a deal,though,we might still see a general election or second referendum Against a still uncertain domestic and global backdrop,we expect the BoE to keep rates on hold this year and next Elizabeth Martins Senior Economist HSBC Bank plc +44 20 7991 2170 7 Currencies Global April 2019 Economic implications While we had originally based our 2019 forecasts on a deal being done ahead of 29 March 2019,our assumption in recent months has been,more loosely,that the UK avoids a no deal scenario.So,despite the news of the extension,we are not adjusting our forecasts.Technically,there is little difference between the transition envisaged in the withdrawal agreement and an extension.In both cases,the UK remains in the single market and customs union to all intents and purposes,with no change to the legal,trading or operating environment.In both cases,there is ongoing uncertainty around the future relationship,which is still to be negotiated.1.Business investment in the UK has underperformed by developed market standards Source:ONS,BEA,INSEE,Macrobond.*Excluding energy.Of course,with an extension,there is still a risk of the more extreme outcomes:the UK still has the right to revoke Article 50 and not leave the EU at all,and it can still leave with no deal.In the transition scenario,neither of these would be possible(at least without the EUs agreement).Moreover,the fact that the UK has not left the EU on time may provoke