UK: Confidence unsettling - Westpac

Tim Riddell, Research Analyst at Westpac, suggests that although UK PM May continues to hold the high ground on domestic politics the nipping at her heels by Scotland’s first minister Sturgeon for an independence vote is unsettling recent confidence.

Key Quotes

“Additionally, former PMs Blair and Major and former chancellor Osbourne have all questioned the May government’s bargaining stance with EU on Brexit.”

“House of Lords amendments may delay the passing of the Article 50 Bill, but this should prove to be a short term hurdle. Nevertheless, a less certain path towards the self-imposed end March deadline could pressure both May and GBP.”

“Rising US yields are now pushing both 2yr and especially 10yr spreads over gilts towards their late 2016 lows. This could also drive GBP/USD towards its lows around 1.20, even though the longer term bias is for ranges to persist.”