The UK government came under further pressure yesterday regarding the ongoing Brexit negotiations after business leaders called on Prime Minister Theresa May to speed up negotiations. As the talks continue to make painfully slow progress, many investors are becoming increasingly concerned that the UK will crash out of the EU without securing a trade deal.
With many businesses thought to have contingency plans in place, Downing Street yesterday hosted a meeting with 15 business groups from across Europe in the hope of retaining business within the UK. In return executives reiterated the current tone of the EU, highlighting that more clarity needs to be provided around key issues such as the Irish border and citizens rights before a transition agreement can be reached.
Access to the single market is expected to widely remain unchanged in the so-called two year implementation period after Brexit formally takes placed in March 2019, yet in recent week’s international business have voiced their concerns that a “no deal” scenario will fracture some supply chains.
Many businesses are expected to take investment decisions dependent on conditions after Brexit next year so many will be seeking clarity around a trade deal at the Brussels summit next month. Although May has made a conscious effort to reach out to British lobby groups and senior executives, many have said that the government has provided scant details about the dynamics of a future trade deal.
The dollar recovered modestly from losses last week resulting from uncertainty surrounding the future of the highly anticipated U.S. tax reform. The tax plan unveiled on Thursday by Senate Republicans differed to that of House Republicans which has raised concerns among investors given the year-end deadline for passing the bill. The reforms are widely expected to boost consumer spending and growth thereby giving the Fed more scope to upgrade its outlook for inflation and ease stimulus.
10:30 – GBP: CPI yoy; Forecast at 3.1% against a previous of 3%
11:00 – EUR: ECB President Mario Draghi Speaks
11:00 – GBP: BoE Governor Mark Carney Speaks
11:00- USD: US Fed Chair Janet Yellen Speaks
14:30 – USD: PPI m/m; Forecast at 0.2% against a previous of 0.4%