2 May 2016
UK: EU referendum risks will intensify - TDS
Research Team at TDS, suggests that the UK economy is already showing signs of an uncertainty-induced slowdown ahead of the 23 June referendum.
Key Quotes
“Under a Remain win, growth will rebound in H2. The Bank of England has said that it will ignore any interim weak data as it tries to prevent markets pricing in a rate cut ahead of its May Inflation Report. We continue to expect the BoE to be in a position to hike by Nov-16, but note that an early- 2017 hike would be reasonable.
EU referendum risks will intensify as the vote approaches, keeping sterling under pressure. We expect cable to grind down to 1.35 ahead of the event, but expect a dramatic short squeeze if our base case of a Remain result is realized. Otherwise, a sharp - and permanent - GBP depreciation likely lies ahead.”
Key Quotes
“Under a Remain win, growth will rebound in H2. The Bank of England has said that it will ignore any interim weak data as it tries to prevent markets pricing in a rate cut ahead of its May Inflation Report. We continue to expect the BoE to be in a position to hike by Nov-16, but note that an early- 2017 hike would be reasonable.
EU referendum risks will intensify as the vote approaches, keeping sterling under pressure. We expect cable to grind down to 1.35 ahead of the event, but expect a dramatic short squeeze if our base case of a Remain result is realized. Otherwise, a sharp - and permanent - GBP depreciation likely lies ahead.”