03 February 2020 by jbchevrel
Brexit risk was back under the limelight today. the GBP lost 1.5% vs $ and 1.3% vs the euro. In senior financial space, UK hold co CDS underperformed the rest of the complex. Barclays widened +2.75 Standard Chartered and HSBC widened +2.5 / +2. Lloyds widened +1.5 and RBS +2. Meanwhile the fair value of the iTraxx senior financial s32 index widened by just +0.4 and the index itself was pretty much flat on the day. This was after the exchange between Barnier and Boris. Barnier said in Brussels that a “highly ambitious” trade deal is on offer for the UK, but only if Boris signs up to strict rules to prevent unfair competition. Minutes later in London, Boris rejected Barnier’s demand and insisted that the UK will thrive even if negotiations fail. Boris added that the UK would also be happy with a relationship based on Australia’s looser arrangements with the EU. For reference, contrary to Canada, Australia doesn’t have a formal trade deal with the EU and faces WTO tariffs and barriers in many areas. In a document released to Parliament, Boris rejected the idea of aligning the UK on EU rules / standards, insisted that the ECJ will have no role over British laws. Boris also made clear that businesses in the UK must prepare now to leave the EU customs union and single market at the end of this year. Does it ring a bell?