Theresa May suffered a new hindrance and her chances of obtaining government support for a Brexit deal have become thinner.
European futures are trading mix and set to kick off this week with a little hope. Investors are digesting the set back over Brexit which took place over the weekend. Theresa May suffered a new hindrance and her chances of obtaining government support for a Brexit deal have become thinner.
Theresa May really needs to decide if she is going to ditch her plans over Brexit or just leave the seat for a person who can perform the damage control more efficiently. Possibly, this is the last chance for the prime minister to corral her divided cabinet if she is serious about delivering the deal in November. Sadly, the majority of another run of 2016 referendum over Brexit still doesn’t exist in the parliament and the businesses and investment banks have to create their own safety net.
Financial institutions are reacting to the changing environment in the U.K. U.S investment banks are in a process of reducing their operational exposure in the UK and planning to shift the operations of about 250 billion euros of the balance sheet to a more stable place such as Frankfurt.
London’s reputation is at stake, this is not a small move. If London wants to keep its reputation as a hub for financial services, the government really needs to put the right person for this job or just throw in the towel and forget the idea of Brexit. No one wants to see or say that the best days for London are in the past. London is the most unique city in the world and under no circumstances, the city should suffer the consequence of a politicians’ decision just like how the currency is suffering. If the banks continue to move their operation out of London, then the optimistic forecast for real GDP for the coming years may just look like a fool paradise.
In terms of currencies, the dollar index is the dominant story and the index is maintaining its strong presence against the G10 currencies. The dominance of the dollar index can easily be seen against the Euro and sterling. The Euro/dollar pair has dropped below the critical level of 1.13 which sends the most bearish signal and the sterling-dollar has also slipped below the 1.29 and this opens the door towards the 1.27.
Having said this, most of the euro weakness in the euro is also down with the fact that the concerns over Italy have taken over.
Having said this, most of the euro weakness in the euro is also down to the fact that concerns over Italy have taken over.
