Danske Research Team
Danske Bank A/S
During his three-day visit to the UK, Obama said the US's top priority is to make a free-trade deal with the EU and that the UK is at 'the back of the queue' . He added that a US-UK free-trade deal could take 5-10 years to complete.
According to Reuters, sources said the EU wants a full 'divorce' before starting any new UK-EU trade talks which would take 'many years' to conclude. No intention to extend the two-year withdrawal period.
Scotland's First Minister Nicola Sturgeon has said that a second Scottish independence referendum ' is very highly likely '.
The first estimate of Q1 GDP growth showed that growth slowed to 0.4% q/q. Slower growth and falling employment indicate Brexit uncertainties have hit the economy.
According to the OECD a Brexit would result in UK GDP being 3% lower by 2020 . Ángel Gurría, the OECD's secretary-general, said leaving the EU was 'equivalent to missing out on one month's income within four years'.
In the financial markets Brexit fears appear to have eased further this week . In the FX market GBP gained further versus USD, while implied GBP volatility has fallen sharply. The market's pricing of the Bank of England is little changed this week, implying around 20% probability of a 25bp Bank rate cut within the coming 12 months.
Opinion polls released this week have been more mixed (see table at the bottom). According to odds from Betfair the probability of a 'Brexit' is still 28% while Matt Singh (a political blogger who was one of the few who correctly predicted the outcome of last year's UK general election) has assigned a 21% probability of a 'Brexit'.
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