Brexit discussion thread XIV (Please read OP before posting)

Or that someone would print it....

Yeah - I've read a couple of times people making the point that prior to 2016, brexit was a cause for the incompetent and second rate and therefore unsuccessful within the Tory party. As a consequence once they took over (and defenestrated everyone else), the incompetence level of the government rose massively - there was nobody competent to pick from.

Kate Hoey has at no point forgot about the border. Her entire modus operandi was always to see a hard border back in Ireland or Ireland pulled back into economic dependence on Britain.

Despite her political beginnings, since the Brexit vote she has heavily aligned herself with the anti-GFA nutters like Jamie Bryson and his ilk. She is a DUP voter and still reckons the only way to avoid a hard border is for Ireland to leave the EU too.

Great quote from Fintan O Toole this morning.

The UK government has developed a variant on Groucho Marx: these are our principles and if you don’t agree to fight us on them, we have others that we can provoke you with.

No insults

A cynic might argue that the real Farage / Vote Leave 'plan' was to wreck the relationship with Europe and kick the foreigners out. That was the sum total of Brexit (apart from enriching the Brexit toffs and millionaires as a bonus).

I think you meant they (the currency markets) don't really believe there will be an EU-UK trade dispute just as they didn't believe the UK would finally exit with no trade agreement with the EU? (and were correct of course).

Maybe neither side wants this, but it is very easy to misjudge when following a policy of deliberately being provocative/antagonistic + playing "hardball" (if that is what the UK is doing here as a tactic).

The stories coming out about Sunak falling out of favour for questioning Johnsons massive cash spend in the next budget would certainly point to a PM who doesn't give a FK about anything long term past his own reign.

Kinda reminds me of Ahern vs McReevy

Yes correct - dispute. Of course they could be wrong, although I expect they are at least as informed as we are, but it's interesting that the markets are remarkably calm about this

Mmm. Either the markets are calm, or they have already priced in uncertainty. I'm thinking it's more the latter.

Sterling took a steep dive after the 2016 referendum and fell steadily for most of the rest of 2016 as it became increasing evident that the Tory Party/the UK government had no clue about how to go about Brexit, no coherent ideas about why it was Brexiting and no clear non-destructive plan for Brexiting. And it has bobbed up and down a bit since then, but has never really recovered.

Sterling was at €1.30 just before the referendum; it fell to €1.12 by October 2016; in the five years since then it has bobbed around in the €1.10 to €1.20 band; right now it's about €1.18. My reading of that would be that, so far as the markets are concerned, uncertainly about how damaging Brexit will be set in in 2016 and has never really been resolved.

I would have said that the brexit risk (i.e. in the 6 months coming to the referendum - i.e. the fact that the referendum itself was a certainty and the outcome could be different to the status quo) led to an initial gradual drop from 1.44 to 1.25. Following initial positive sounding results, sterling bounced up but then immediately dropped upon the leave result announcement to 1.15 followed by a drop to a low of 1.08 - and more or less stayed in the low 1.10s range.

Following the TCA, Sterling has strengthened - from around 1.11/1.12 to 1.18 - but there was no immediate reaction to the announcement of the TCA deal itself. So it seems that the markets put almost no credence in the idea that the UK would not accept the EU TCA deal.

As said however, despite the negativity and to me credibility of the UK current threats to renege, the markets really aren't reacting at all.

Simply put, as compared to a €1.44 price of sterling with effectively no possibility of brexit on the horizon versus a post brexit UK at least apparently credibly threatening to start an intractable trade war, €1.18 (and rising) makes me think sterling is overvalued.

Unless of course the markets really don't believe Johnson would do something like that.

Of course the markets aren't always right - but I have to expect that given the money at stake they have as good an idea of what is happening as we do.

That's what I don't understand. But the fact that the currency did respond to the brexit vote itself shows it's not entirely artificial.

Sterling is traded in vast quantities, and there is no way that the UK government (or anyone else) could covertly make trades of the size required to affect the market price. The scale of activity required would be simply too large to be hidden.

Besides, the UK government doesn't need to do that. No government does, in fact. There's a much simpler way of influencing your currency's price, if that's what you want to do; you adjust interest rates. If sterling interest rates rise relative to other currencies, more people will wish to deposit their funds in sterling so as to get the higher return and, in order to do this, they will go into the market to buy sterling, thereby driving the price up. And vice versa, if you want the price of sterling to fall.

Very little room for the UK? Has he learned nothing from the last few years?

Frost already got his rejection in before the EU even officially announced the details (though Frost would have known about them). The UK will simply make up something else which is the most fundamental thing ever. They have already moved onto the ECJ, now arguing that the EU should give up its 'sovereignty' by agreeing to the UK having equal say in arbitration. And you can bet if the EU agreed to that then the UK would complain that the arbitration is biased agains the UK.

Because that has been their fundamental believe from Day 1. They believe that the EU is out to get the UK, that the UK had no voice, no input into any decisions.