Research Team at Lloyds Bank, notes that in the UK, David Cameron’s draft for a new settlement with the EU saw much media and political furore, as well as scrutiny from the business community.
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“But much like the public, it appears investors didn’t know what to make of it, with the announcement prompting little market reaction. The potential implications have been further complicated by hints that the PM is considering a ‘bill of rights’ that would give the UK parliament supremacy over EU law.
As they stand, we doubt the proposals will change the minds of that third of the electorate that is firmly in favour or the third that is firmly against EU membership. That leaves the undecided third to continue to confuse the pollsters, who have so far been unable to agree on the referendum’s outcome. The most recent show the net balance of those in favour of staying in Europe range from -9 to +20ppt.
The PM is due to travel to Hamburg on Friday to continue the negotiations ahead of the key EU Summit on 18-19 February. Chancellor Merkel’s support will be crucial. If all goes smoothly, the referendum could take place as soon as June 23 – a welcome prospect as uncertainty in the meantime risks putting the pound under renewed pressure.”
(Market News Provided by FXstreet)
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