A Brexit plan without single-market access - Nomura

Analysts at Nomura noted that newspaper reports over the weekend that indicate that Tuesday’s speech by Theresa May is likely to rule out single-market access for the UK. 

Key Quotes:

"We think indicating an approach to the negotiations that leads to a “clean break/hard Brexit” from the EU will provide just as many more new questions as those it answers about the future EU/UK relationship. It was not just Theresa May in the headlines as UK Chancellor Philip Hammond noted that if the UK leaves the EU without an agreement on market access, the nation’s economic model (via tax cuts) could be changed “to regain competitiveness”. 

While Donald Trump added that a US/UK trade deal after Brexit would be ‘a great thing’, so far this morning GBP would disagree. The currency is over 1-1.5% weaker and we are yet to hear the actual plan. If the reports are true confirmation of the fact may push GBP towards 1.18 vs the USD. 

We are currently short GBP in Q1 and while the move has been sizeable this morning we think there is still more to go. EUR/GBP should test the 0.90 levels and GBP/NZD should head back to 1.65."

Brexit: what we do and what we don't know yet - Nomura