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Morning Brief – Is this week(finally) the decisive week for Brexit?

Is this week(finally) the decisive week for Brexit?


Markets have been here before -hence GBP having given up ground in the past week- but on the grounds of time elapsed alone, both stale Bulls and Bears as to the outcome of the Brexit negotiations look as if their Christmases may come early this week, or……. alternatively, not. At least the negotiators are now all in the same place as of yesterday: London. Although the level of white sound(designed to block out conversation) is as high as ever from both sides. EUR still looking firm and versus USD reached through the important psychological barrier of 1.20 over the weekend. NYMEX WTI oil at $45.53 on Friday night. FTSE100 at 6367 despite a downbeat outlook from Chancellor Sunak last week. The problem he has, is to convey the seriousness and size of the UK’s indebtedness while at the same time encouraging business and consumers to invest and spend. It is fair to say that Sunak managed the first bit but fell down on the second.



Anti Vaccers


We read all the time about how a significant proportion of the population in all countries are sceptical that vaccines are safe-whether that translates into refusing to be inoculated when Covid vaccines become available is another matter, but certainly the suggestion is that those numbers are also large. Most sceptical country in the world is France, with 33% believing that vaccines are not safe. Surprisingly of the Western nations the Swiss with all their health clinics are next with 22% followed by the pigeon fancying Belgians with 21%. The USA sceptical percentage is 11% which we should remind ourselves means 33 million people, the UK 9% and South Africa just 3%. It is safe to assume that the other Asian countries which have all put in the best global anti Covid performances will be in the same camp as Malaysia, Singapore and Thailand which are all 97% believers.



Asian Family Wealth


Head and shoulders above the rest of the top 20 stand the Ambani family of India with their wealth at $76 billion and owners of Reliance Industries. In second place is the Kwok family of Hong Kong that own Sun Hung Kai Properties and are worth $33 billion.In third place is Dhanin Chearavanont of Thailand whose Charlene Pokphand Group is worth $32 billion. In total the top 20 families control $463 billion and their influence stretches from Japan to Indonesia in Asia and to all corners of the world given the nature of their various global businesses.



The Eagles


Californian rock band, the Eagles were formed back in 1971 and the two best known members Don Henley and Joe Walsh are still at it almost 50 years later. Their first Number One was in 1974 and was one of many hits enjoyed by the band who have all individually done good; drummer Don Henley is worth more than $250 million and even in 2020 the Eagles have managed to gross $41 million.


Best of My Love:


Every night I’m lying in bed
Holding you close in my dreams
Thinking about all the things that we said
And coming apart at the seams


We try to talk it over
But the words come out too rough


I know you were trying
To give me the best of your love


Beautiful faces and loud empty places
Look at the way that we live
Wasting our time on cheap talk and wine
Left us so little to give


That same old crowd
Was like a cold dark cloud
That we could never rise above


But here in my heart
I give you the best of my love




Discussion and Analysis by Humphrey Percy, Chairman and Founder

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Morning Brief – Euro



After hitting a near 3 month high v USD, EUR was, if not exactly on the skids last night, at least 0.40% below its high. Concerns were mounting at the impact of more Covid cases on the EU economies. Angela Merkel, revered internationally but especially at home-an unusual description for a politician these days, laid down the rules for the Germans which involve restrictions for public life for the foreseeable future. Despite scenes of demonstrations on our screens in the past couple of weeks, the Germans are pretty law abiding and so when their Chancellor sets rules, they tend to listen. EUR pretty much unchanged v GBP with markets closely listening to statements from both sides of the (virtual) Brexit negotiating table.


Healthiest countries in the world?


In 5th spot is Switzerland-clean water, health system and life expectancy(84); 4th is Japan-exercise and diet and stopping eating when 80% full; 3rd is Iceland-outdoor living, fresh fish and hot springs; 2nd is Italy-vegetable and olive oil rich diets and 1st? Spain! That is down again to an olive oil rich diet, fresh vegetables, red wine and following that with the all important siesta.




The Danish demise of their 17 million mink population has already been well reported. Out of favour mink has been cold shouldered by most Western fashionistas, so the fact that half of Europe’s mink population (17/35 million)has recently been culled in Denmark has passed largely unremarked. Faux fur had already been adopted by the top fashion houses such as Gucci. Pelt prices are less than half where they stood in 2014 and mink fur sales are less than a third than in 2014 but only thanks to buyers in China and Russia who are less concerned about real fur than the West. At 6 million the Danish population is only a third of the number of the recent mink population and will be proportionately affected economically.

That leaves Danish bacon, and coincidentally of the 257 million EU pigs slaughtered in 2016, 18.2 million were in Denmark which while a relatively small 7% of the total, still represents another very important component of Denmark’s economy.




Back in 1982 having enjoyed hits with both Diana Ross and subsequently the Commodores, Lionel Richie went to Number One with Truly and Number Three with his debut solo album. Despite having married and divorced twice, singleton since 2004 Lionel has managed to both amass and hang on to a fortune of USD 200 million/EUR 168 million. Whether it is down to his vocal cords or his accountant, Lionel Richie is a mellow, rich grandfather and little known fact, is hugely popular in Iraq.


Girl, tell me only this
That I’ll have your heart for always
And you want me by your side
Whispering the words “I’ll always love you”

And forever
I will be your lover
And I know if you really care
I will always be there

I need to tell you this
There’s no other love like your love
And I, as long as I live
I’ll give you all the joy
My heart and soul can give

Let me hold you
I need to have you near me
And I feel with you in my arms
This love will last forever


Have a great weekend!




Discussion and Analysis by Humphrey Percy, Chairman and Founder

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Morning Brief – Tough day at the Commons

Tough day at the Commons


Everywhere from government to markets, households to workplaces, people are looking two ways with respect to the pandemic. Firstly, at what is ahead and the promise of a vaccine and secondly, what lies between then and now. However, not one of these collectives have better demonstrated this ‘mind the gap’ analysis of the pandemic than Chancellor Sunak in the House of Commons yesterday. His chancellorship following the swift replacement of Sajid Javid has been one characterised by the big cheque book. Praised for taking the necessary steps to support the economy with hugely expensive policies including the furlough scheme, he is now exploring the less familiar path of budgetary parsimony. Yesterday’s announcement in the commons saw a whiplash style spending review with large spending commitments peppered with warnings of a huge bill to come next year.


This week has seen considerable changes take place to the UK political economic outlook. Between the announcements on Monday regarding new social restrictions and the Chancellor’s spending review yesterday, a somewhat bleak picture is emerging for the UK economy over the 4th Quarter of this year and the Spring. Despite some large spending commitments yesterday from the Chancellor the projection is for the UK economy to enter a double dip recession in Q4 this year and unemployment to peak next year at 7.5%. The lockdown restrictions remain severe regardless of which tier a region is placed in. With the hospitality sector still under considerable threat in tiers two and three and everyone who can work from home ordered to do so still across tiers 1, 2 and 3, further business closures are to be expected.


Part of the Chancellor’s spending review included a £2.9bn programme to help stave off the rise in unemployment. Dubbed the Restart scheme, the initiative so far has been criticised for not taking adequate measures to ensure job vacancies exist for the scheme to reallocate the long-term unemployed. Winners and losers were produced by yesterday’s spending announcements with schools, hospitals, police and prisons picking up extra funding at the expense of the overseas aid budget.


Sterling found support during the chancellor’s announcements to the House of Commons yesterday despite the £394bn fiscal deficit expected this year. Commentators seemed optimistic that pledges made in the manifesto had been honoured in the spending review reinforcing the return to normality next year and upgrading the supply side of the UK economy. The ruling out of austerity next year to fund the deficit also encouraged GBP higher. Mr Sunak also did not comment on how the deficit would be funded – higher tax or lower spending – despite warnings of a tough road ahead.




Discussion and Analysis by Charles Porter

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Morning Brief – EUR, AUD, NZD stronger against USD

EUR, AUD, NZD stronger against USD


While the market likes the appointment of Janet Yellen as Joe Biden’s Treasury Secretary, the onward march of the risk currencies against USD continues. NZD strengthened 0.9% and AUD 0.4%. NZD is now on a 2 year high versus USD at $0.6985.




With the Dow breaking 30,000 for the first time and up 1.43%, inevitably WTI oil joined the party and stood just below $45 last night. FTSE 100 up 1.55%.

All on the back of Biden and vaccines. GBP a little softer against USD at 1.3340.


Hot Air


Whatever transpires in the foreseeable post COVID future, eating al fresco is going to be in demand globally and not just in warmer climes. That means a couple of things for savvier restaurants and cafes: firstly that close by outside space needs to be grabbed and secondly that primitive and inefficient patio heaters will not cut it.

Assuming those two requirements are met, demand for propane gas will rocket (unfortunate pun). SGM-FX’s Edwin Holland, anxious to prove in these hot air stakes at least that he is less mouth and more trousers, has been looking into the USA’s propane consumption and learnt it stood at 284 million gallons in 2019. In 2020 that has soared to 500 million gallons. UGI the largest, and owner of American Cylinder Exchange and also Suburban Propane have both seen their shares fall 20% this year as markets have not yet spotted the probability of even greater growth in propane cylinder demand.

Trends that start in the USA tend to spread to Western Europe and beyond, so expect similar gas cylinder companies in other colder places to see a corresponding uptick in demand. Eating Out has a whole new literal meaning!




It was this day in 1965 that the global fame of the Beatles was such that when they expressed a desire to do their Christmas shopping in Knightsbridge emporium Harrods, the then management extended the same privilege to the FabFour that they normally reserve for the Queen: they shut the store to everyone else. Three years later in 1968 the Beatles released the White Album with their very best songs including George Harrison’s While My Guitar Gently Weeps:


I look at you all, see the love there that’s sleeping
While my guitar gently weeps
I look at the floor and I see it needs sweeping
Still my guitar gently weeps


I don’t know why nobody told you
How to unfold your love
I don’t know how someone controlled you
They bought and sold you


I look at the world and I notice it’s turning
While my guitar gently weeps
With every mistake we must surely be learning
Still my guitar gently weeps




Discussion and Analysis by Humphrey Percy, Chairman and Founder

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Morning Brief – T’was 33 nights before Christmas..

T’was 33 nights before Christmas..


When all through the foreign exchange market not a cross was stirring, not even the Pound. Sterling longs were hung by the CME with care, in the hopes that Mr (Lord) Frost would be there soon.


That’s enough poetic parody from me for this year, but Clement Clarke Moore’s scene of tranquility can be likened to the European open yesterday. The Pound was one of the only decisive movers anticipating a potential Brexit breakthrough over the next few days and optimistic about the UK’s new AstraZeneca-Oxford coronavirus Vaccine. The rest of the market displayed below average volatility and price change. The rally in the Pound too was ultimately contained short of three month highs despite several attempts to break higher.


Data yesterday should have been of relatively low salience limited to European and US Purchasing Managers’ indices (PMIs) that provide a timely reading of sentiment and confidence in underlying segments of an economy. The European PMIs came and went showing deteriorating confidence and optimism in the Eurozone economy both in manufacturing and services. The data follows rising numbers of infection on the continent and a slowdown in Q3’s swift economic rebound. Despite the downbeat data the Euro continued to find higher grounds also supported by optimism on securing a Brexit deal and tested another psychological level in EURUSD. The PMIs were largely ignored or discounted therefore.


We might have expected a similar reaction to US PMIs but the morning’s snowy scene of tranquility and calm was ripped apart by the US data. Instead of contracting as per the forecasts both manufacturing and services PMIs came in considerably better than expected (56.7 vs. 53 & 57.7 vs. 55 respectively). The psychological levels that the Dollar has weakened to throughout the morning’s trade against both the Pound and the Euro were rapidly retreated from. The data also stood in sharp contrast to a deteriorating economic backdrop across much of Europe and Asia and therefore invited optimistic assessments of the US’ near-term economic fortunes, pushing USD higher. Despite having steadied overnight and throughout today’s session so far, the severe price movements are a reminder of how quickly markets can move even within major pairs. Profit and loss orders proved their worth yesterday with the short-term moves allowing our customers to realise their FX goals.




Discussion and Analysis by Charles Porter

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Morning Brief – Germany



Another tale of one of the world’s leading economies borrowing much more to do what it takes: this time it is Germany and the announcement that the Finance Minister plans to take on more than EUR 160 billion or USD 190 billion in debt in 2021 to counter Covid. The German government expects GDP to contract by 5.5% in 2020 and to grow 4.4% in 2021. If that proves to be correct the arithmetic means that Germany’s GDP will still be net minus 1.34% after 2 years.





Yesterday the streets of the capital of Taiwan were full of protesters for the annual “Autumn Struggle”march which this year was focused on the government’s decision to ease restrictions on imports of US pork despite concerns for food safety. US pork contains the drug Ractopamine which while encouraging leanness is banned in both China and the EU. The government rationale is that this easing will enhance links between the USA and Taiwan which most observers including and especially China hitherto believed had no need for enhancement. So far this year the New Taiwan Dollar has only strengthened versus USD from 30.5 to 28.5 an increase of 6.5%.



Electric Vehicles


Now that the announcement has been made in the UK that new car sales of petrol and diesel vehicles will be banned after 2030, attention will turn to the knotty problem of charging them. Less than 7% of new vehicles are fully electric but 1 in 4 are hybrid. The UK Gov website loftily says that there are more than 4,000 charging points in the UK but misses the point that only a tiny proportion of cars use them. At 8 hours for a full charge, the only practicable way to achieve that is overnight. Most drivers go for a 100 mile top up which takes 35 minutes with a rapid charger. Setting off from home to refuel might involve rather a long wait unless of course dramatic advances in both batteries and charging infrastructure happen in the next 9 years. That could explain the small print which says that hybrid vehicle sales will be permitted in the UK until 2035.



The Moon: Ocean of Storms


Nothing much to do with financial markets on Planet Earth, but China is set to be the third nation after the USA and USSR to land on the Moon with the intention of bringing back 2kg of lunar rock. This week the Chang e5 unmanned mission will launch with the target destination of the Moon’s Ocean of Storms which is a huge lava plain and has never previously been visited. For those wondering when it was that the previous missions brought back Moon samples, it was back in the 1970’s, round about the time that Pink Floyd released Dark Side of the Moon. Honestly you had to be there but the music has lasted better than the lyrics:


“I’ve always been mad, I know I’ve been mad, like the
most of us…very hard to explain why you’re mad, even
if you’re not mad…” Breathe
Breathe, breathe in the air
Don’t be afraid to care
Leave but don’t leave me
Look around and choose your own ground


Long you live and high you fly
And smiles you’ll give and tears you’ll cry
And all you touch and all you see
Is all your life will ever be


Run, rabbit run
Dig that hole, forget the sun
And when at last the work is done
Don’t sit down it’s time to dig another one


For long you live and high you fly But only if you ride the tide
And balanced on the biggest wave
You race towards an early grave
On The Run

“Live for today, gone tomorrow, that’s me, HaHaHaaaaaa!”




Discussion and Analysis by Humphrey Percy, Chairman and Founder

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Morning Brief – U.S. Employment

U.S. Employment


It is all too easy to lose sight of the bigger picture when analysing the weekly U.S. jobless claims which for the week ending 14-11-20 saw a rise of 742,000 as further business closures to combat rising Covid infections took their toll. This compared to 711,000 the previous week and a forecast of 707,000. To put these numbers in perspective, the peak of U.S. jobless claims in the global financial crisis of 2008-2009 was 665,000. Claims are of course a very important part of the picture, but the key statistic in any economy is the number of jobs created or lost over a period. In March and April 2020, 22.2 million jobs were lost in the USA. To date only 12.1 million of those jobs have been recovered. USD unmoved on the release.




Oil was on the skids last night on Covid effect fears on global demand. WTI was at $41.52. More positively for oil, OPEC+ are reported to be considering a delay in the scheduled January 2021 boost of 2 million barrels a day in output. As we have written before, despite vaccine optimism there is still an effective cap on oil prices. Meanwhile Russia and Saudi Arabia are both exporting approx 1.6 million barrels of oil per day to China and the hope is that level of demand will be maintained as a key driver of the global economy.


Crocodile Rock


It was this day in 1972 that Elton John released Crocodile Rock which was his first Number 1 in the USA and went Gold within 2 days of its release. Due to a less than hip ex colleague of mine who at the time of Elton John’s knighthood ceremony was the Queen’s Lord Chamberlain, Elton was announced as John Elton, a mistake that was immediately rectified and the newly ennobled Sir Elton John emerged from Buckingham Palace. Back in 1979, the then Mr Elton John was the first Western rock artist to play in the Soviet Union following in the footsteps of pop stars Cliff Richard and Boney M. Tickets were priced at 8 Roubles which was the same amount of the average daily wage at that time. Elton played 4 concerts in each of St Petersburg and Moscow which were all sold out. USD v Russian Rouble untroubled on this anniversary at 76.4.


I remember when rock was young
Me and Susie had so much fun
Holding hands and skimming stones
Had an old gold Chevy, and a place of my own

But the biggest kick I ever got
Was doing a thing called the Crocodile Rock
While the other kids were rocking ’round the clock
We were hopping and bopping to the Crocodile Rock, well

Crocodile rocking is something shocking
When your feet just can’t keep still
I never knew me a better time and I guess I never will
Oh, lawdy mama those Friday nights
When Suzie wore her dresses tight
And the Crocodile rocking was out of sight


Have a great weekend!




Discussion and Analysis by Humphrey Percy, Chairman and Founder

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Morning Brief – Playground Pharmaceuticals

Playground Pharmaceuticals


Not wanting to be outbid, Pfizer-BioNTech vaccine partners returned to the numbers to check the efficacy of their vaccine. Their headline of 90% published only last week was bettered by Moderna’s vaccine. Not only could Moderna’s vaccine be stored and transported more easily despite relying on similar fundamentals, but they claimed a near 95% success rate. Not wanting to lose the limelight, a brief revamp of the figures at Pfizer and the statisticians managed to find the missing 5%. The claim whilst looking like corporate playground jostling puts the Pfizer-BioNTech vaccine back on top. Aside from being amusing to watch two multi-billion Dollar companies squabble over a handful of percentage points, the vaccine breakthroughs have shifted major market participants’ forecasts for the Dollar.


As we have said many times, due to the Dollar‘s safehaven status the resolution of a global upset, such as the pandemic, should cause an unwinding of defensive demand that has accrued behind the US Dollar. The success of these two vaccines is considerable fundamentally because the trials prove that the virus that causes Covid-19 can be warded off by vaccination. Before testing, we didn’t know if this was possible or if, as with many ailments in life, it cannot be vaccinated against. Therefore corporate squabbling of ‘my vaccine is better than your vaccine’ only develops the fact that in most of the population we have a weapon to fight Covid-19 beyond therapeutics.


The consensus forecast among analysts for 2021’s EURUSD pair is 1.21. But partially that reflects a relatively strong performance by the Euro as we emerge from the pandemic. The Dollar across the board is expected to weaken much faster with emerging market and commodity currencies in particular expected to claw back ground on the greenback. In a recent research note, Citi Bank analysts commented that the Dollar could fall as much as 20% next year alone. The perfect Dollar storm of a Covid vaccine, Republican President Biden at the helm and a Federal Reserve stuck in grab the bucket mode could facilitate this outcome.




Discussion and Analysis by Charles Porter

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Morning Brief – Lufthansa



The German airline and its subsidiaries Eurowings, Swiss, Austrian and Brussels Airlines have announced that as of next year Economy passengers will no longer be offered free meals and snacks but will have to pay for them like for example Ryanair, Easyjet and BA. Lufthansa and Swiss will however offer Economy passengers a complimentary bottle of water but the message is that if your choice of fare is predicated by complimentary food and refreshments, then you will need to stump up for Club. Lufthansa shares that started 2020 at just under EUR18 and fell to EUR7 are now, since the Covid19 vaccine news last week, just under EUR10. Before you pile in and buy Lufthansa shares,  it is worth knowing that for the first time the airline industry is now talking about passenger numbers not returning to where they were in December 2019 until ……..2025.


Atacama Desert


This area is where no less than a quarter of global production of lithium necessary for batteries in cell phones and electric vehicles is sourced. Albemarle Corp of the USA is in dispute with Chilean miner SQM because SQM is declining to share the contents of a sensitive environmental impact report with its US rival. The mining in the Atacama Desert is solely conducted by these two companies but concerns of the ecological damage have been mounting and not least for the negative impact on the flamingos that live there. The report is due for completion in February but the Chileans are understandably not committing to share it with their American rivals. For those wanting to get aboard the lithium rollercoaster, Albemarle shares currently unaffected by the environmental report and which are quoted on Nasdaq opened in Jan 2020 at $75 before falling to below $50 in the March fall out and now?…….$128.88.


John Denver


This day back in 1975, Henry John Deutschendorf Jr who had sensibly adopted the professional name of John Denver had a Double Number 1 in the Billboard Top Hot 100 chart with I’m Sorry and Calypso. Way ahead of his time, John Denver used his musical success as a platform for his political ambitions which were predominantly to do with ecological issues. At the age of 54 and with over 2,700 hours pilot experience, John Denver took his new Long EZ experimental plane out for a flight across Monterey Bay in California in  1997. Crashing in to the Bay for unexplained reasons but probably due to having run out of fuel, John Denver was killed on impact. Calypso was the name of marine environmentalist Jacques Cousteau’s exploration ship and the song was dedicated to his work.




To sail on a dream on a crystal clear ocean, to ride on the crest of the wild raging storm.
To work in the service of life and the living, in search of the answers to questions unknown.
To be part of the movement and part of the growing, part of beginning to understand.
Aye, Calypso, the places you’ve been to,
the things that you’ve shown us, the stories you tell.
Aye, Calypso, I sing to your spirit, the men who have served you so long and so well.


Like the dolphin who guides you, you bring us beside you
to light up the darkness and show us the way.
For though we are strangers in your silent world, to live on the land we must learn from the sea.
To be true as the tide and free as a wind swell, joyful and loving in letting it be.
Aye, Calypso, the places you’ve been to,
the things that you’ve shown us, the stories you tell.
Aye, Calypso, I sing to your spirit, the men who have served you so long and so well.
Aye, Calypso, the places you’ve been to,
the things that you’ve shown us, the stories you tell.
Aye, Calypso, I sing to your spirit, the men who have served you so long and so well.




Discussion and Analysis by Humphrey Percy, Chairman and Founder

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Morning Brief – Bye!



The removal of special advisor Dominic Cummings and the bubbling cauldron of tensions in Number 10 could show us a lot about Brexit. Number 10 does have a back door that photographers and journalists are banned from. Probably more than one in reality. So when Cummings was forced to walk out the big black door of Number Ten, tail between his legs and box in hands, we can be fairly sure the Prime Minister was sending a message. So what does making the master mind of the vote leave campaign and someone the media liked to portray as the government’s master puppeteer mean for the Pound?


Two things. Firstly, in the short run, Cummings’ very public dismissal presents a risk to the Prime Minister, his government and therefore the Pound. Before his appointment as special adviser Cummings kept a very public diary. His blog was his place to air his political ideas on everything from polling and forecasting to musings on the European Union. That same blog has remained stagnant and unpopulated since January this year and sparsely used during his period as adviser. With the broader stability of number 10 in question, it seems possible that Cummings could reopen his diary to scold Johnson. Some say he has even travelled to Barnard Castle to set up a lair in which to plot and mastermind the demise of his former advisee.. (Others don’t). Any reaction that harms political stability and the PM could undermine Sterling demand and thus its value.


With decades of surviving sticky situations  both professionally and personally, any short run risk to Johnson can likely be discounted and spun as an embarrassed aid seeking revenge. What then might this change show us about the course of Brexit? Cummings’ dismissal followed a resignation by Lee Cain. If two events can be considered a theme then the evolution of Number 10’s staff is nodding towards a cognitive tilt on Brexit that might pave way to the removal of some red lines blocking the path to a Brexit deal. With the final week of intensified negotiations underway and an EU summit taking place virtually on Thursday and Friday, it appears the stars might be aligning for 28 signatures on a Brexit deal. With Sterling biding it’s time for more concrete progress there is still a considerable discount in the Pound that could unwind if a deal is passed.




Discussion and Analysis by Charles Porter

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