GBP: Outlook clouded by Brexit outcome - Rabobank

Jane Foley, Senior FX Strategist at Rabobank, suggests that despite the resignations of four ministers in the UK yesterday including Brexit secretary Raab and McVey and the stepping down by a parliamentary private secretary, PM May sounded a defiant tone during her speech in parliament.

Key Quotes

“The stakes are high. Not only is she attempting to shore up support for her Brexit deal but she will also be looking to head off a challenge to her position.  The next few days will be crucial both in determining if there is still a chance that May can push her plan through parliament but also in defining the influence of the PM going forward.”

“GBP plunged on the back of the surge of political uncertainty.”

“Over the next few days the very real prospect of a hard Brexit will likely ensure that the pound remains vulnerable. Additionally any turn of events in Westminster that appears to increase the risk of a general election would likely compound the vulnerability of the pound, given the Labour party’s policies in favour of nationalisation.”

“On a hard Brexit we see risk of a move towards EUR/GBP 1.00, meaning that the vote in parliament on the PM’s deal will be crucial.”