Research Team at Rabobank suggests that the UK PM May is expected to lay out some detail of her Brexit plans during a speech today.
Key Quotes
“Following her remarks in a TV interview earlier this month, the market is bracing itself for signs that the cabinet is preparing to take the UK out of the EU’s single market. Although Downing Street has remarked that this is “speculation”, sterling was again under pressure with GBP/USD dipping below the 1.20 level for the first time since the October flash crash. Several weekend UK newspapers promoted the view that a hard Brexit was the government’s favoured route. May’s meeting with the New Zealand Prime Minister on Friday and English’s remarks that he wanted to negotiate a “high quality” free trade agreement was cited as evidence that the UK was seeking to strength its trade position outside of the EU (even though New Zealand has a population of under 4.5 million).”
“UK Chancellor Hammond took a different approach. He told Germany’s Welt an Sonntag that he hoped the UK would remain a European style economy with a corresponding tax and regulation system. That said, he threatened that the UK economy could be “forced to be something different” it is was “closed off” from the single market. This sparked speculation that the UK could slash corporation tax to gain a competitive advantage. Sterling is trading above its overnight low, but in our view it remains a vulnerable currency given the weight of political and economic uncertainty.”
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