GBP: 'Schadenfreude': US Confirmation Hearings A Catalyst - Barclays
'Schadenfreude', the pleasure derived from another person's misfortune, could describe the forces driving sterling this week.
Alongside continued UK economic data resilience, political risk in Europe and the US increased the appeal of GBP, for which an adequate political risk premium already exists.
This week, confirmation hearings in the US could benefit the GBP from a reduction in net long USD positions. Moreover, the historical tendency for US and UK policy rates to display a positive correlation suggests that the downside risk to our cable forecasts from large rate differentials is limited.
Data this week include November IP (Wednesday; consensus: 0.8% m/m; previous: -1.3% m/m), which should continue the recent trend of positive data for the UK economy.