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Union Bank of Switzerland’s analysts suggest that even a postponement does little to clarify the next steps and the path of least resistance to the conclusion of Brexit is that the UK leaves the EU with a version of the current Withdrawal Agreement in place.

Key Quotes

“It may well happen before the end of June. If the delay is longer, then other options have to be considered. It is likely that a majority of MPs would likely support a softer, Norway-type relationship with the EU. However, May is likely to resist this option since it would risk splitting the Conservative Party.”

“If the impasse in Parliament continues, a general election or a second referendum would become more probable.”

“At this point, it is possible that the UK could opt to remain within the EU. Given the uncertainty, we do not advocate taking directional views on sterling, but we remain alert to entry and exit opportunities if volatility persists. For the time being, the most sensible approach seems to be to hedge sterling’s downside risks.”