Analysts at Deutsche Bank point out that yesterday, the British Pound had its worst day in a month, dropping around -0.85% versus the dollar as Brexit negotiations continued and Prime Minister May faced down the conflicting flanks of her governing coalition.
“First, Steve Baker of the Eurosceptic European Research Group proposed an amendment that would have required the Northern Ireland Assembly to approve anything that would treat NI separate from the rest of the UK, making it more difficult for Prime Minister May to negotiate a backstop deal with the EU. Baker ultimately withdrew his amendment, avoiding a more direct confrontation within the Conservative party.”
“Second, media outlets (including Bloomberg) reported that a “centrist” MP is supporting a no-confidence vote in PM May, which might signal that a political crisis is more imminent than most people realize.”
“Our strategists have held this view for weeks, and continue to think that the fundamental tension within the governing coalition is more significant than discounted in the market. Exemplifying this yesterday Ireland’s Foreign Minister Coveney said that any attempt by the UK to move away from the backstop arrangement "is not going to fly with Ireland or the EU as a whole." So the NI issue does not appear to be any closer to a solution.”
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