Sunday bloody Sunday

Sterling underperformed in September, in line with our bearish forecast (UK & Sterling facing potential quadruple whammy, 4th September 2020). It gradually recovered from 22nd September, appreciated throughout October and peaked on 27th November. Sterling NEER has since weakened about 2.4% to an 11-week low. The sell-off at the turn of December was exacerbated by all four of the United

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Time is priceless but has a steep cost

While some countries, including Sweden and United states, have eschewed national lockdowns over the past nine months or so the vast majority have adopted unprecedented measures to deal with a once in a century pandemic which has so far cost almost 1.4 million lives. The strategy has invariably been a simple yet complex one – to save lives – but

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UK & Sterling facing potential quadruple whammy

Sterling has enjoyed a strong, if bumpy ride, since late-June. It has been the second strongest major currency against the US Dollar and appreciated 3.7% in NEER term, thanks in part to a build-up of speculative long-Sterling positions. Markets have seemingly taken heart from government measures to support the economy, including the labour and housing markets and service sector, the

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Sterling’s made its mind up, UK voters not quite

Sterling has appreciated 1.5% in Nominal Effective Exchange Rate terms since 26th November to a 7-month high, a notable move in a world of depressed currency volatility. Markets have seemingly taken comfort from the (modest) widening of the gap between the ruling Conservative Party and opposition Labour party in opinion polls to about 10pp and YouGov predicting that Prime Minister

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Brexit: Greater standard deviation and skew pointing to second referendum

The recent local elections and European Parliament elections and Prime Minister Theresa May’s announcement a week ago that she would resign on 7th June have materially altered the probability distribution of the possible Brexit outcomes, in our view. British voters threw their weight behind parties which unequivocally back either i) a “no-deal” Brexit – namely Nigel Farage’s newly formed Brexit Party,

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Brexit: Another 48 hours

The House of Commons (HoC), the lower house of parliament, will on 12th March hold a legally-binding vote on whether to approve Prime Minister May’s draft Brexit deal – the Withdrawal Agreement and Political Declaration on the UK’s future EU relationship. We expect the outcome of this critical vote to be closer than on 15th January when an all-time high

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Tuesday 11th December: Brexit D-Day

In the past three weeks, British and European Union (EU) negotiators have formally reached an agreement on a draft “Brexit deal”, in practise two separate albeit inter-linked documents: 1) The terms and conditions of the UK’s exit from the EU – the legally binding Withdrawal Agreement (WA) and 2) The non-legally binding “Political Declaration on the UK’s future relationship with

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