I’m struck at the enthusiasm of all and sundry to tell us that European and US growth rates will hardly be affected by the UK post-referendum slowdown.
That flies in the face of the increased correlation of major economies’ growth rates in an ever more connected world. You can’t have it both ways – if the world thrives post-Brexit, the UK won’t suffer that badly. Particularly if there is a strong fiscal policy response.
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For now, the sterling short-squeeze goes on. I doubt GBP/USD can get through 1.35, but the context matters. The June 24 peak was 1.5020 (albeit in middle-of-the-night liquidity) and the low is just above 1.28, so a 50% retracement of the fall would be around 1.39....
SocGen maintains a short GBP/USD from 1.3750*