This week Brexit is back on the agenda. I recall remarking that Carney’s statement of a
possible rate hike was a ruse, like he has done many times before, proving the Bank Of
England is becoming more and more political. Well, we see that some of the points coming
out of the Brexit negotiations were enough to shakeup the market.
The key points on the table are the rights of European citizens and the best way to deal with
freedom of movement. The UK has already capitulated, simply they will import all the
European laws and exclude the ones they don’t want. We all know what this means, the slim
conservative majority in Parliament will not succeed and we end up with the exact same
laws as before. The European team have already made it clear that we cannot move forward
to trade negotiations unless the matter of Euro citizen rights is resolved, the March 29th,
2019 date can only be extended if all 28 member states agree.
It seems we are heading for
an even softer Brexit. It is early days but the Pound will be under pressure for now.
Sterling sold off against the Euro as the market prioritized Gilts ahead of cash. Let’s see
where this circus goes next.