UK Brexit stance gradually capitulating to the EU - BBH
Analysts at BBH see the UK Brexit stance as gradually capitulating to the EU as the UK has been forced to accept that the divorce negotiation precedes talks of a new agreement.
“In apparent contrast to UK Foreign Secretary Johnson's suggestion earlier this week that the EU could "go whistle" if it expected the UK to be paying the EU after the amputation, UK Brexit Secretary Davis, who is a possible successor to Prime Minister May, appears to have accepted the obligation ("financial settlement"). This is a potential softening of the UK stance, but we continue to warn against a soft Brexit, which has meant access to the single market while parting from the free movement of labor and other freedoms (EU red lines).”
“Sterling is firm, at new highs for the week near $1.2970. It bottomed in the middle of the week just ahead of $1.2810. Last week it reached almost $1.30. The UK reports June CPI next week and retail sales. The latter is expected to have fallen, but the median in the Bloomberg survey shows steady inflation. We expect sterling to be particularly sensitive to inflation and any softening could further dampen rate hike pressure.”
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