Products
Platforms
Accounts
Inspiration
About
Support
For institutions
Log in Open account
International
CFDs and forex (FX) are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. 
Show more
CFDs and forex (FX) are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, FX, or any of our other products work and whether you can afford to take the high risk of losing your money.
Show less
26brexitM

Macro Digest: The Brexit deal that keeps on giving

Macro
Picture of Steen Jakobsen
Steen Jakobsen

Chief Investment Officer

Summary:  The European Union quickly agreed to UK Prime Minister May's Brexit deal, but her true challenge remains getting it through Parliament. Labour have voiced their opposition to the deal, as has the DUP.

Click here for the full text of “Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community as endorsed by leaders at a special meeting of the European Council on 25 November 2018”.
Brexit deal
Source: Bloomberg
Our analysis

This was the "easy part" of the Brexit deal – agreeing with a desperate European Union. The vote is unlikely to carry in the UK Parliament, which is setting up additional nervousness and volatility; Prime Minister May is looking to get a parliamentary vote by Christmas.

We remain seriously concerned about the UK economy. Our Credit Impulse reading for the country has collapsed to unheard-of lows, suggesting that the UK economy could be recession-driven by the summer of 2019.
Credit impulse, consumer confidence, and new car registrations
We forecast the vote to be a loss for PM May (with probability at 70%). Any rally in GBP should be sold (critical cable support sits at 1.2660), as the UK parliamentary system is working its way towards a non-solution and as such risks a handover of control in Parliament despite the lack of any real alternative. The ultimate price could be a split of the Conservative party before 2019 is over.
GBPUSD
GBPUSD, source: Saxo Bank
This morning saw EU officials wave goodbye to their stormy but memorable cross-Channel marriage. Following 20 months of acrimonious negotiations, the EU gave its OK after less than an hour of discussion.

The EU described it as a “orderly withdrawal”, and then immediately returned to its old, opposition-intimidating ways with EU Commission President Jean-Claude Juncker commenting that "...anyone in Britain who thought the bloc might offer improved terms if MPs rejected the deal would be 'disappointed'".

Reuters carried the British opposition response, which was no kinder:

"Britain’s main opposition Labour Party will oppose the government’s Brexit deal in parliament, its leader Jeremy Corbyn said on Sunday, describing the agreement approved in Brussels as “a miserable failure of negotiation”.

“This is a bad deal for the country. It is the result of a miserable failure of negotiation that leaves us with the worst of all worlds. It gives us less say over our future, and puts jobs and living standards at risk,” Corbyn said in a statement.

“That is why Labour will oppose this deal in parliament. We will work with others to block a no deal outcome, and ensure that Labour’s alternative plan for a sensible deal to bring the country together is on the table.”

If the easy part for PM May was to make a deal with an EU desperate to close the talks, the focus is now on Parliament. Sunday saw the deal rejected by Labour (see above) as well as the 10 Democratic Unionist Party MPs that secure May's majority in Parliament.

UK media also insist that up to 90 lawmakers from her own Conservative party have said they will vote against the deal. 

In the face of all this, can May really expect a successful vote by Christmas? It appears unlikely.

More on Brexit from: The Financial Times, The Guardian, and The Economist.

Quarterly Outlook

01 / 10

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
    Read full article
  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

    Read full article
  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

    Read full article
  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

    Read full article
  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

    Read full article
  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

    Read full article
  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

    Read full article
  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

    Read full article
  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

    Read full article
  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

    Read full article

Content disclaimer

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Bank A/S and its entities within the Saxo Bank Group provide execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer and notification on non-independent investment research for more details.

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900 Hellerup
Denmark

Contact Saxo

Select region

International
International
Pricing
Account types
About Saxo
Legal

All trading and investing comes with risk, including but not limited to the potential to lose your entire invested amount.

Information on our international website (as selected from the globe drop-down) can be accessed worldwide and relates to Saxo Bank A/S as the parent company of the Saxo Bank Group. Any mention of the Saxo Bank Group refers to the overall organisation, including subsidiaries and branches under Saxo Bank A/S. Client agreements are made with the relevant Saxo entity based on your country of residence and are governed by the applicable laws of that entity's jurisdiction.

Apple and the Apple logo are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.