ING says lack of fresh detail in PM May's Brexit speech unlikely to get talks fully back on track (expand)

- Cliff edge risks delayed, but not removed
- Lack of fresh detail unlikely to get talks fully back on track

- The most significant point is that we get a formal proposal for an “implementation period” with the UK willing to make ongoing contributions to the EU in return for ongoing access to the single market. This is envisaged to last “around two years” and will involve ongoing free-movement of labour, but there will be a registration system for new arrivals. She didn’t mention the hotly contested “final settlement” – which would involve an additional payment to cover costs including pension liabilities, legal commitments and contingent liabilities."

IMPLICATION FOR RATES

- "If there is a little more business optimism and this translates into stronger economic activity, this could see the Bank of England becoming more inclined to raise interest rates. Inflation is currently 2.9%, and employment is at record levels. An improved growth outlook makes it more likely the BoE will remove its emergency stimulus, helping to cement market expectations for two hikes by the end of 2018. That said, we don’t think this will mark the start of a meaningful tightening cycle. But this could add more momentum to sterling’s recent strong run."

22 Sep 2017 - 16:28- ForexResearch Sheet- Source: ING

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