January 14, 2019

Chart of the Week: Fathom’s StRRiM elevated amid Brexit uncertainty

by Fathom Consulting.

As the UK’s Brexit deadline approaches, the uncertainty surrounding the UK’s economic outlook is increasingly evident in market pricing. Last month, FX volatility briefly drove Fathom’s Sterling Relative Risk Metric (StRRiM) to the highest level seen since the immediate aftermath of the 2016 referendum. Market volatility is likely to continue in the near term, and possibly beyond the UK’s scheduled date of departure, if the UK asks for and is granted an extension to the current 29 March deadline — now the single most likely outcome in Fathom’s judgement. Sterling would undergo a modest relief rally in the event that parliament approved Teresa May’s proposed deal, or something close to it, but fall by almost 10% if the UK left with no deal.

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