G20: Brexit highlighted as a source of concern - MUFG

Derek Halpenny, European Head of GMR at MUFG, suggests that the Brexit referendum result certainly appears to have been in focus in China at the G20 gathering with Japan releasing a 15-page document outlining potential problems and hurdles that would need to be tackled in order to reassure Japanese companies based in the UK.

Key Quotes

“PM May also risked raising tensions within government by dismissing the points-based system for border control that Boris Johnson and Michael Gove support and also suggested her wish is for a soft border control deal that ensured as much access as possible to the Single Market. No doubt, tensions within government are set to escalate as the government wrestles with setting the basis for triggering Article 50.

The pound was the best G10 performing currency last week – up 1.5% as the data indicate less of negative impact from Brexit. The pound may well advance further this week. On Wednesday, BoE Governor Carney will testify to parliament along with Deputy Governor Cunliffe and MPC members Kristin Forbes and Ian McCafferty. IMM speculative data released on Friday indicated a modest reduction in short pound positions and clearly there is a risk over the short-term of a more notable liquidation of short positions given the improvement in the data that may ultimately lead to the markets reducing the probability of the BoE having to ease policy any further.”