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The Elephant in the room

Long summer

Over the summer the UK government has had to deal with a number of concerns surrounding Brexit. Reading through the lines of May, Raab and Barnier’s most recent public statements the negotiators seem to have made progress on a number of issues albeit the Irish border.

Barnier has proposed a backstop that would mean NI staying in the EU customs unions, large parts of the single market and the EU VAT system. However the UK government rejected the backstop as a threat to the integrity of the UK that could see the UK as a whole remains aligned with the EU customs union for a limited time after 2020. 

Although Danuta Hübner at yesterday’s Parliament constitutional affairs committee said Barnier has offered “some openness” to make the border backstop more acceptable to the UK, no solutions have emerged.

Former foreign secretary Boris Johnson has also used his Daily Telegraph column to criticise Theresa May’s Chequers proposal, saying it needs a fix. Boris believes that the current proposal would be a victory for the EU as “the UK has agreed to hand over £40bn of taxpayers’ money for two thirds of diddly squat.”

Data reliant 

Recent BOE Inflation Reports have shook GBP markets. As we approach todays release from the Bank of England sterling remains sensitive. The Bank of England have stressed they’re data-reliant, following August’s Manufacturing PMI slipping to 52.8 vs 53.9 and stresses from Brexit continue. The Bank of England will focus on the 9:30am release UK Construction PMI, expected at 54.9 vs July’s 55.8. Analyst have voiced concerns whether the data release could present another negative surprise for GBP and the question’s they may face during post report. 

GBP EUR

Having hit a one-year low last week of 1.0987 to then pull back to high 1.11s traders have been torn on whether the floor had been found, or just tested. For a long-time 1.10 has been a firm psychological barrier however due to poor data, speculation and politics many barriers have recently been broken, confirmation of this would be a break below 1.0963. 

US

The dollar consolidated near a one-week high against a basket of currencies on Monday as tensions around global trade and a continued selloff in emerging markets fuelled demand for the greenback. U.S. President Donald Trump said on Saturday there was no need to keep Canada in the North American Free Trade Agreement and warned Congress not to meddle with the talks to revamp NAFTA or he would terminate the trilateral pact altogether. 

Richard Trumka, labour union leader, criticised Trump’s trade policies on Labour Day, suggesting the US President had done more to “hurt workers” than help them. Trump retaliated by tweeting that Trumka had represented his union “poorly”, and also emphasised that “our country is doing better than ever before with unemployment setting record lows”.

 

 

 

 

 

 

 

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