MUFG Research discusses the current political situation in the UK and argues that PM Theresa May might still avoid a political crisis and that GBP could eventually benefit from the removal of two hard-core Brexiteers.
"There is perhaps one positive outcome through all of this, that May is rid of two hard-core Brexiteers. In the long term, this points towards a softer Brexit, which will calm market nerves. The question for markets to try to gauge now is the likelihood that Brussels will accept the Prime Minister’s proposals," MUFG argues.
"We are at the most important point in Brexit since the referendum took place just over two years ago. There is a positive outcome that is achievable but the high level of uncertainty over the near-term direction means we may see lower GBP levels before any recovery takes hold," MUFG adds.