Phillip Hammond has warned that France might use the customs checks along the French borders to increase the political pressure on the UK government should the potential of a no deal Brexit rise.
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Given that a large portion of UK exports to Europe go through the French ports, this political play could draw plenty of pressure from UK business leaders who will be keen to protect their competitiveness on the international stage.
Richard Branson said yesterday that we would be forced to move Virgin’s UK base out of Britain in an event of a No-deal, with the potential for unfavourable exchange rates alone making surviving within British shores close to impossible. There could well be more high profile leaders mirroring this sentiment which in turn will add further pressure to the new premiership.
The uncertainty this brings could certainly add volatility to sterling exchange rates. The handling of this kind of scenario is likely to play a pivotal role in the build up to October’s departure date and highlights how difficult the road ahead remains.
A slight concern may be the number of cards the next leader will be able to play in return seem to be dwindling too. Just yesterday the Foreign Ministry of China criticised Jeremy Hunt for using the debate over China’s rights record to draw more support amongst voters.
It is unlikely he will be able to call upon the “golden era” relationship with China at this point to try and leverage a better deal out of Europe. Similarly, the UK’s relationship with the US is in the spotlight once more now that Britain is controversially looking for a new Ambassador to the United States.
Sterling has remained relatively range bound this week against its major currency counterparts, but with key housing data over the weekend and important employment data on Tuesday, this could cause some movement. You may wish to get in touch with your account manager to discuss the options available to you to limit your exposure.
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