Sterling Starting To Lag Again - Fears Creeping In

Published date: 11/07/2018

Looking ahead to Thursday's presentation of the UK White Paper to the EU, nerves may be tensing once again as PM May's relaxed proposals (shall we say) have already drawn the ire of some of her cabinet members, two of which found them unacceptable and resigned.  Based on the fact that these plans form the basis of negotiations going forward, there is the possibility that more concessions will be required.  The Brexit plans include alignment with the EU on customs (and effectively the single market) on goods and agricultural products, though stands its ground on services which comprises the bulk of the UK's national output (GDP).  

The early signs are that the EU is set to question if not reject the initial plans, and this will clearly anger some of the hard-line Brexiteers who judge the PM has gone too far in conceding ground.  Given the concerns from British industry, Theresa May has made a call to safeguard the economy rather than deliver emphatically on the referendum, with large names having issued warnings on business viability in the UK which naturally threatens jobs.  

Caught between a rock and a hard place, PM May's position at 10 Downing St is still under threat and a heavy GBP tone reflects this.  Thursday could the Pound drawing much of the attention as the market awaits the initial response from Europe.  As above, if rejected, this heightens the chances of either a no deal scenario or the PM having to concede more ground and undermine her own position as a result.  


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