Both Boris and Jeremy might be making a rod for their own back (or ours) as they’ve said they’re not going to accept a Northern Irish backstop as part of their negotiations. This was the biggest sticking point of the last deal for both sides, so whereas getting a deal across the line in the UK without a backstop would be easier, getting a deal to put to the UK parliament without one will be next to impossible.
This could just be tough talk, but the market hasn’t thought well of it: Sterling was having a reasonable day yesterday until these comments came out. Investors have sent the Pound back down towards the bottom of the range as we await employment data today – we mentioned last week though that businesses are looking at hiring to manage expansion rather than making cap-ex investments, as it’s easier to lay off workers at short notice than large equipment orders, so even if the numbers are good the market might not buy it. Sterling as low as it is makes for poorer summer holidays, but it does provide a very stable footing for upside if there’s a hint of good news over the next few weeks.
That upside could come from the EU as Bloomberg reports that the bloc held back some concessions from Theresa May when it realised her deal was unlikely to pass regardless of what was in it. These concessions might include more emphasis on technology at the border, only making Northern Ireland part of the backstop (good luck getting that past the DUP) or linking the financial settlement (the £39bn) to a future trade deal between the two parties.
Boris has told Trump not to expect the backing of the UK if there is conflict with Iran. He has said that “diplomacy must be the way forward” and if that he were the PM he’d not take us in. Jeremy Hunt, as well as travelling across the country to the hustings, has been continuing in his role as foreign secretary and still holds out hope that the Iran accord can be saved. The BBC has an article on the subject that’s well worth a read.
Across the pond, it’s likely to be a very busy summer in Washington.: Talks on raising the debt ceiling have once again resumed as they’re due to hit the borrowing limit at some point in September and want to try and get something nipped in the bud before the summer break (spoiler alert: they won’t). This has once again become a deeply bipartisan issue and democrats aren‘t willing to sign anything off that doesn‘t come with some king of funding for veteran healthcare and whereas Trump is all for spending on the current military, he’s less inclined to spend big on veterans.
There’s more sabre rattling from Trump on his desire to weaken the Dollar. There’s a good CNN article on this that points out that he might actually have a point – the dollar is overvalued against the vast majority of currencies when you look at the Economist’s big mac index. One of the simple ways to do this is for the Treasury to simply state that the US is no longer pursuing a strong dollar policy (a Clinton era policy) which seems like a sensible and not too interventionist approach.
Treasury Secretary Steve Mnuchin has called Facebook‘s planned crypto currency a ‘matter of national security’ and has said they “will not allow digital asset service providers to operate in the shadows“. the Wall Street Journal has a great piece that explains who is concerned about a crypto (most major governments) and why (money laundering, terrorist financing, sanctions avoidance, tax evasion etc.)
Looking to today: a vote in the European Commission to confirm Ursula Von Der Leyen as the next Commission president will be a big focus. The vote is due this evening and if she’s not confirmed it throws the race back open with a month to go. Reuters has an article on what’s been promised by her in a bid to win over would-be skeptics.
Have a great day