UK: PM Theresa May’s first Cabinet taking shape - SocGen

Kit Juckes, Research Analyst at Societe Generale, notes that the UK continues to make headlines, with PM Theresa May’s first Cabinet taking shape.

Key Quotes

“In comes Boris Johnson to the Foreign Office (and gasps from the commenting classes), and out goes George Osborne (replaced as Chancellor by Phillip Hammond). Mr Hammond has already said there won’t be an emergency Budget, and he’s already praised BOE Governor Carney (ahead of today’s MPC meeting). There is an opportunity (and a need) for the UK to counter the post-referendum economic slowdown with a more expansionary fiscal stance and were that to happen, it would be positive for sterling. For now, the RICS survey confirms a softening of house price expectations, and the MPC is likely to ease policy.

We expect a 25bp rate cut (to 25bp) and a re-start of asset purchases to the tune of GBP 25bn/quarter. The latter would be a slight surprise for the market and cap GBP/USD.”