Brexit News and Noise Continue to Steer the British Pound
The United Kingdom (UK) is scheduled to leave the European Union (EU) on March 29, 2019; and as we stand, the Brexit Withdrawal Agreement that is currently on offer from the EU to the UK will not pass through a vote in the House of Commons. If there is no agreement between the two sides – or if an extension of the Article 50 timetable has not been agreed – the UK will leave the EU with no-deal and will revert to World Trade Organization (WTO) trade rules. If an agreement is reached, a transition period until December 2020 will be triggered where the UK can negotiate its own deals. This makes the first quarter of 2019 one of the most important three-month periods in the UK’s history. That in turns will translate into any and all action, news release or rumor having an outsized effect on Sterling.
As we write, Prime Minister May lost control of the Brexit negotiations and her government, and there is no sign of any deal that will be accepted by either side. And, that is hitting Sterling hard, forcing the currency ever lower. In addition, it is possible that May could lose her job before the Brexit end date via a Labour-led vote of no confidence, a general election may be called, a second referendum may be put to the people of the UK, the EU may offer meaningful concessions, or the UK will leave with no deal. All these options are on the table and live and need to be priced-in to Sterling as we enter the first quarter of 2019.
UK Economy Slows Down; Jobs and Wages Data Robust
UK growth has slowed as we enter the
