The political party Best for Britain has successfully launched a legal challenge in order to secure a second EU referendum. Whilst many anticipate that the legal challenge will be snubbed, it does appear that Best for Britain have some legal grounds in order to launch their challenge.
They reference their case on existing law that states that a referendum must be held if the UK makes plans to be linked to current EU bodies or departments such as the European medicines agency.
Whilst this legality has been quickly refuted Theresa May openly endorsed in her recent speech at mansion house that she wished for a ‘deep and broad’ relationship with the EU.
The government has been quick to pour water on the case branding the legal challenge as nonsensical. It will, however, be interesting to see how markets react. Historically the Pound tends to lift slightly at so much as a whiff of second referendum or soft Brexit. It will be interesting to see if markets give any credence to this latest Brexit news and that will surely be highlighted in Pound trading and forecasts next week.
Theresa May’s Brexit wish list
At the beginning of the month, Theresa May projected her vision holding a press conference at Mansion House essentially setting out her wish list for Britain. She spoke about a vote to take control or the UK’s laws, borders and money, whilst also maintaining the UK’s relationship with Europe and to grow their respective economies together.
One key objective that May is pursuing is the open border between the Republic of Ireland and southern Ireland in her speech. Which currently doesn’t seem like a valid solution, although numerous proposals have been voiced, this challenge still remains.
May also confirmed that the UK would be leaving the customs union and single market. Her aim to essentially select the prime cuts of EU membership without the commitment of membership allow the UK to control its own interests in an autonomous manner. Her aim to create a frictionless integration with the EU, adopting access to streamlined trade model whilst controlling immigration, creating laws as the UK sees fit.
EU’s guideline document
Whereas the UK’s typically delivers it position or stance via press conference keeping those interested up to speed via televised speech’s the EU parliament prefers to release documents. The EU guidelines document essentially maps out its vision of a future relationship between the UK and the EU.
The EU’s offer includes access to tariff-free trade goods the one concession is that the European Union expects to receive continued access to British waters.
The EU’s proposed trade deal would also allow the UK access to the lucrative services market. However, if the UK (as is expected) continues down the road of a Canada plus plus deal the EU has warned offering could be more limited, due to the UK not being an EU member.
The EU also has requested cooperation on defense, foreign policy, and judicial collaboration as well as policing. The topic of a European police force was one point which has attracted a lot of opposition before the referendum and will likely be quickly opposed by May.
Whilst Brexit news has taken a back seat in recent weeks due to the escalating tensions surrounding the poison attacks in the city of Salisbury, this week welcomes a new milestone in the Brexit negotiations which hopefully wont derail the Pounds exchange rates ascendancy.
The EU summit takes place in a few days, the summit will welcome talks surrounding the UK and EU’s transition period. The transition period is agreed and states that trade will remain virtually unchanged for a period of 2years avoiding huge swings or at worst a financial crash and therefore remains a critical hurdle to pass. If a transition is not approved between the 22-23rd expect pound exchange rates to drop significantly. If however an agreement on the transition period is approved we should see the GBP/EUR exchange rates make their way to 1.15.
The last few weeks have seen the Sterling exchange rate has slowly appreciated against the Euro seeing the GBP/EUR climb from a month low of 1.1159 and climb comfortable back above 1.13.
The moves have been fuelled by better than expected service data, an upbeat spring statement by Phillip Hammond. The chancellor revising up the UK’s modest growth to 1.5% and confirming debt is down.
Elsewhere Pound exchange rates have performed well against the dollar, the GBP/Dollar exchange rate closing at 1.3942. The Dollar has posted some weaker retail sales data and markets appear undecided about the appointment of Larry Kudlow, Kudlow apparently is not in agreement with protectionist movement and the steel and aluminum tariffs.