GBP: ‘Hard’ versus ‘Soft’ Brexit - MUFG

Derek Halpenny, European Head of GMR at MUFG, notes that the pound dropped 2.0% versus the dollar last week and was fuelled mainly by the re-emergence of focus on Brexit with the markets shifting back toward the risk of a ‘hard’ rather than ‘soft’ Brexit.

Key Quotes 

“The three hardline Brexit government figures – Boris Johnson, Liam Fox and David Davis are gaining support with Chancellor Hammond and PM May not making a stronger case at present. The EU-27 summit in Bratislava on Friday gave an impression of a united EU that will strongly argue in favour of protecting the four fundamental underpinnings of the EU, including free movement of people. While the UK economy is proving more resilient than expected, we see little prospect of any sustained advance for the pound given the pronounced uncertainty as we move toward the potential triggering of Article 50 in Q1 2017.”