UK outlook clouded by Brexit issue – BBH

UK government's belated success in getting the EU's approval to start talks about the post-exit was tarnished by the loss of having the last word on Brexit, suggests the research team at BBH.  

Key Quotes

“In a narrow vote, Parliament secured the right to grant final approval.  Another confrontation and possible defeat could be avoided in the week ahead if the specific date of 31 March 2019 can be removed from withdrawal bill.”  

“Given that Q1 18 will be spent discussing the transition period, a hard date may make that period more difficult.  It is in the EU's interest to argue for a standstill agreement; this is one that keeps the UK firmly in the EU's rules and regulations, while the UK would be technically out of the EU.  It also seems widely recognized that the Irish border issue has not been resolved in any meaningful way, implying that it could emerge again as a formidable challenge.”

“The US two-year premium over the UK appears to be the widest in at least a quarter century and sterling its flirting with a downtrend line drawn off the 2014 and 2016 highs.  Speculative positions are relatively extreme still.  Sterling seems particularly vulnerable.”