UK: Domestic Political Developments Increase Brexit Risk - MUFG
Lee Hardman, Currency Analyst at MUFG, suggests that the Pound weakness
remains relentless early this year ahead of the EU referendum.
Key Quotes
“The
BoE’s trade-weighted measure of the pound has declined sharply by
around 11% over the last five months reversing almost two thirds of the
advance recorded in the prior two and a half years. The latest political
developments in the UK have further increased the risk of Brexit by
potentially undermining the popularity and authority of Prime Minister
Cameron’s leadership.
Previous public opinion polls had
signalled that support from Prime Minister Cameron for the UK to remain
in the EU was viewed as a potentially important factor which could sway
voting intentions. There is a risk now that the Remain campaign has been
weakened which potentially could make the EU referendum even more
finely balanced.
The BoE have signalled that they are comfortable
to leave policy unchanged until after the EU referendum when they will
be able to better asses the outlook for the UK economy.”
(Market News Provided by FXstreet)
