Health Secretary Matt Hancock has reiterated comments made by Dominic Cummings, the Prime Minister’s most senior aide, that ‘no deal’ can no longer be blocked by MPs.

Dominic Cummings stated to other ministers and officials that even if Boris Johnson was to lose a no-confidence vote when the MPs return from their summer recess on 3rd September, Boris would be able to schedule the poll for after October 31st, thereby allowing a no deal Brexit to pass by in the meantime. Hancock was also questioned about the possibility of a snap General Election as speculation continues to fuel, following the announcement of a £1.8 billion boost for the NHS. Although Hancock refused to comment, instead adding that plans were in place to ensure an unhindered supply of medicines in the event of no deal.

 

UK services PMI provides support for the pound

UK services PMI rose to a 9-month high with a reading of 51.4, moving up from the previous reading of 50.2 and beating the market forecast of 50.3. Importantly, the figure remained above the key level of 50, unlike recent manufacturing and construction data, which have both recorded readings below. A reading above 50 represents expansion and below 50, contraction. Hence, with more than two thirds of the UK economy derived through the services sector, this data most likely contributed to a welcome boost for the pound.

Currency markets uncertain of Brexit developments

Brexit uncertainty remains key sterling driver

Despite stronger than expected data, the UK economy remains under pressure. There’s no doubt that the main drive behind movement of the UK economy is the ongoing Brexit uncertainty. Thus far, Prime Minister Boris Johnson has ruled out meeting any of his European counterparts, unless they remove the Irish backstop from the Withdrawal Agreement, something the EU has ruled out. Instead, Boris has ramped up preparation for a ‘no deal’ making a further £2.1 bn available.

It is understood that Boris Johnson sees the chance of leaving the EU without a deal as extremely small, but with Boris’ firm lines in stark contrast to those of the EU, it’s difficult to see a compromise.

Michel Barnier, the EU’s chief negotiator has been hugely critical of Boris’ aggressive approach and has reinforced that the EU will not move on the issue of the backstop, drastically increasing the odds of a ‘no deal’ Brexit.

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