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Brexit negotiations commenced on Monday June 19th, with the UK initially hoping for a ‘parallel’ discussion on exit arrangements and future deals. However, the UK has already lost its first battle with the EU by caving into demands to discuss the terms of its divorce, including the exit fee, before future consideration of trade deals.
EU Lead Negotiator Barnier is currently targeting completion of such by December, when both sides could move to discuss the framework of the transition period and trade talks.
‘Brexit for Britain’ as envisioned by Chancellor Phillip Hammond includes:
In the meantime, Sterling continues to remain vulnerable post Brexit, and we don’t yet know whether to expect a spike or a drop before the end of 2017. It’s interesting to note that Chief BoE Economist Andy Haldane, a usually dovish member, said that he is now in favour of a rate hike before the end of the year; stating that the risks associated with the leaving policy tightening too late are rising. Mr Haldane went on to say that: “Beginning the process of withdrawing some of the incremental stimulus provided last August would be prudent moving into the second half of the year.”