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Deutsche Bank analysts suggest that the focal point of the week for the markets will be the EU Council summit taking place on Thursday and Friday.  

Key Quotes

“Amidst the negotiations with the EU, the UK government will also be outlining its legislative programme for the coming session of Parliament in a Queen’s Speech today. Surreal timing given all that’s going on but it will effectively be an election manifesto. This all comes before a planned special sitting of Parliament, which is also the deadline set under the Benn Act, which says if MPs either haven’t approved a deal by that date, or explicitly approved leaving the EU without a deal, then the Prime Minister has to ask for a three-month extension to the Article 50 deadline, currently set for 31 October. So a bumpy path to a binary moment on Saturday.”

Our FX strategist became bullish on Sterling on Friday morning and target $1.35. They are slightly less concerned as to whether the deal passes as they think the latest developments mean that as a minimum the Tories should now campaign on their deal if they get voted down in Parliament.  So they believe the next election will be based around a deal (if one hasn’t been reached) or a second referendum and that no deal risks have fallen.”