Sterling Fall Continues

Sterling's alarming fall continued today following last weeks flash crash. The crash was blamed on rogue computer trades, possibly an accidental “fat finger" trade. Sterlings weakness can undoubtedly be attributed to the UK deciding to pursue a hard BREXIT strategy. Perhaps what has taken the market by surprise is Europe's hardline response. Hollande said late last week that "Britain must suffer the consequences of leaving the EU in order to save the institution from an existential crisis", some believe that Friday's crash while an error is nevertheless the direct result of the mounting tension over BREXIT.

We have been taken aback by the complacency of many people we speak to over the BREXIT process and the likely attitude that Europe will bring to the negotiations. Europe is not going to enter into negotiations with the UK on free movement of peoples within the Eurozone, no matter the cost, because in Europe's eyes what is at stake here is the future of Europe itself rather than simply the UK's involvement. By moving for a hard BREXIT the UK has little room to compromise on this point which means all rights and access to the European market will be lost. Further to this Europe will seek to punish the UK further so that it can be made an example of to all other members.

Hollande summed up this position by saying Europe “has always lived with crises. But this time, it’s not another crisis. It is the crisis.”