- Sterling finds support at 1.16 following positive GDP figures
- Business investment remains in positive territory – no signs of Brexit impact yet
- Bank of England’s Minouche Shafik claims ‘further stimulus is likely’
- Japan-EU trade deal likely to be complete by end of year despite Brexit
- European diplomats see UK heading for a ‘hard Brexit’
It’s been 3 months since the UK opted to leave the European Union, and with little prospect of what Brexit is, the UK is no closer to deciding what and when Brexit will happen. That being said, its been a busy week for Sterling despite little economic data, the real test begins next week with a handful of PMI releases that could shape the Bank of England’s decision to cut rates before the end of the year.
As it stands, Sterling has found some support around 1.15-1.16 against the Euro, and whilst it has made advances beyond 1.19 in recent weeks, very little has helped cushion the Pound in these ranges for extended periods.
With Article 50 on the backburner for now, the next big change in direction for Sterling will likely happen when the UK decide whether to except lesser membership from the EU, and therefore negotiate a deal with the EU, or opt for a hard Brexit and negotiate trade deals elsewhere. A hard Brexit could arguable bring more uncertainty for the economy.
The Bank of England have made changes to policy and have put in place measures to stabilise the impact of Brexit, although its difficult to determine such impact when the UK hasn’t actually left the EU. Minouche Shafik has made further statements this week that the BoE could implement further measures if economic data takes a turn for the worse.
With Japan’s recent letter to the UK regarding the need for a good deal following Brexit, it doesn’t come as much of a surprise to see an EU-Japan trade deal follow through. Japanese car manufacturers in the UK such a Nissan are not happy with the concept of Brexit which could harm their business. Theresa May has a tough time balancing the needs of the people against the corporate leaders.
So where is the UK heading after this week? European diplomats are almost certain its a complete divorce from the EU. With European leaders likely to make it as hard as possible for the UK, a complete withdrawal and therefore a clean slate for the UK could avoid some of the potential headaches that could incur from the negotiation phase.
Another week has gone by for Brexit Britain and still nothing is concrete.