UK economy in a mix - BBH

Analysts at BBH explain that over the past year developments that favored what is arguably an ill-defined soft Brexit often were positive for sterling.  

Key Quotes

“Developments seen as tilting the odds in favor of a hard Brexit were often sterling negative.  Now that Article 50 has been triggered this may change.  Ostensibly, formal negotiations will begin shortly after the election. Much of the initiative now is in Brussels' hands.  Perceptions of a weak leader at 10 Downing Street may be harmful to the investment climate at precisely when circumstances require more.”

“The UK economy slowed more than expected in Q1 and did not appear to be reaccelerating in Q2.  Inflation is expected to peak in the coming months when oil's recovery and the impact from sterling's steep losses fade.  The Bank of England meets the middle of June again but is widely understood to be on hold for a considerable period.  The Brexit negotiations are going to be fraught with tensions and harsh words, especially in the beginning of this two-year process for which the clock is already ticking.  The liberal global trading system that has evolved over the last 70 years is being challenged from within at the same time terrorism is threatening it from without.  A third terrorist strike in the UK this year took place on Saturday.”

“May's call for an election in the first place, which contravened the previous Tory government's attempt to set fix schedules for elections, was unexpected.  Yet the relative success of Labour, led by Corbyn, is a complete and utter surprise.  A Labour-led coalition government would like to scare many investors, and the first instinct may be to sell-off UK assets if this became a distinct possibility.”