Theresa May is staring down the barrel of a metaphorical gun at the moment, as she tries to persuade MPs from all corners of the House of Commons to back her Brexit plan. That task has already proven to be extremely difficult, but comments from Donald Trump will certainly not have helped matters. One wonders what went through her head when she learned that the US President decided to weigh in on the debacle and suggested the UK might not be able to trade with the EU.
While her team has been quick to say that Trump’s fears are unfounded, traders thought it was enough to sell the pound which lost further ground against the euro and dollar yesterday. The comments will serve to reinforce arguments from MPs that her Brexit proposals do not amount to a good deal and a difficult task has arguably become even harder.
Meanwhile, a second independent economic examination of the Prime Minister’s deal found that it will cost up to £2,000 a year per person. While researchers conceded that the exact costs were highly uncertain, they said that the deal is likely to create ‘new friction to trade with Europe’, ‘reduce the economic benefits of migration’ and ‘worsen the outlook for the public finances’. Hammond and May are both insistent that the UK will be better out of the EU, but their voices are becoming increasingly isolated.
With no real economic data releases from the UK, attention will be trained on any Brexit-related news, as well as US economic data. The next major release is on Friday, when we will see November’s Gfk consumer confidence.