In this piece, we present the main takeaways from our recent trip to London.
All we met expect PM Theresa May to win the UK election despite polls narrowing. How UKIP voters vote in Brexit constituencies may be decisive for the outcome.
Still, the Conservatives may regard the election result as a disappointment, making Theresa May less powerful and vulnerable to hardline Brexiters.
There is a consensus that a Conservative victory would be positive for GBP in the short term. A hung parliament is the most negative scenario.
We seem to be alone in the view that a governable coalition between Labour, LibDems and SNP would be positive for GBP on 3-12M due to the softer Brexit among the three partiers (expected range 0.75-0.80).
The most difficult part of the Brexit negotiation is the beginning (not least the settlement of the 'divorce bill'). Most expect a free trade agreement covering goods but not services to be concluded in three to five years.
The Bank of England is sidelined despite higher inflation due to slower growth and Brexit uncertainties.
To read the entire report Please click on the pdf File Below