Important Links

Brexit Uncertainties Weigh on UK Equities and the GBP

7 November 2017FXEconomicsEquitiesUK
  • Following UK Prime Minister Theresa May's presentation at the EU summit, German Chancellor Angela Merkel highlighted that both sides had work to do in preparation for the eventual Brexit talks about transition and trade in December. She highlights that negotiating a transition and future relations between the EU and the UK will be far more difficult and time-consuming than the four divorce topics: financial settlement, citizenship rights, Irish border and immediate Brexit transition.
  • In Citi's long-held view, the Article 50 period will not be enough to settle this and negotiations will continue during the transition. The outlook for Europe ex-UK equities remains positive despite renewed political pressures. The European GDP growth rate of around 2% – led by Germany at 2.4% – is contributing to a strong pickup in earnings growth, across sectors.
  • On the other hand, this political backdrop will likely be challenging for UK assets. Citi analysts are underweight mid-cap equities that are mainly exposed to domestic sectors Blue chips mostly offer good dividend yield support and overseas earnings, but could face more volatility as sentiment moves with Brexit-related headlines.
  • Meanwhile, Citi analysts believe the GBP is not expected to rally sustainably until the UK has a clear long-term roadmap. The currency is likely to range-trade before that and may retest post-Brexit lows if the EU negotiations don't progress over the coming months.

Our recent research

Temporary Reprieve from Delay in Tariffs

While risk assets generally cheered the delay of tariffs on a multitude of Chinese goods, Citi analysts think that the delay serves to prolong trade tensions between US and China.

Find out more


Keep the Yield Curve Inversion in Perspective

While the 3 month Treasury bill – 10 year Treasury bond yield curve has been inverted since March, the 2-10 year Treasury yield curve recently inverted for the first time since 2007, spooking investors into de-risking.

Find out more


Fed's Greenlight for EM Central Bank Easing

Fed's recent rate cut has opened doors for Emerging Market (EM) central banks to do the same, without having to worry about FX instability and capital outflows.

Find out more

EconomicsPoliticsEmerging Markets

Take the first steps to your wealth management planning with Citi

Speak to a Relationship Manager
0207 500 1992

Already with Citi? Contact your relationship manager or view product availability on Citi Online

Why choose Citi

A relationship - not just a bank account

A dedicated Relationship Manager giving you access to our internal team of product experts and all our benefits

Access to exclusive Citi products

A range of current and investment products available both on shore and offshore, in the currency of your choice
Multi-currency accounts
Investment products

Global services for a global lifestyle

Our team is here to support you getting started in UK or with International travel and relocation
Moving to and from the UK
Travelling overseas

Offshore investments

We offer a diverse range of banking and investment services, including for those who want access to offshore investments

Find out more

Just moved to the UK?

We can save you time money and hassle. If you are a foreign national in the UK, Citi's International Banking Service can help you manage your money, home and away.

Find out more

Investment products are not insured by any governmental agencies, are not bank deposits, and are neither obligations of, nor guaranteed by, Citigroup, or any of its affiliates, unless otherwise stated. Investment products are subject to investment risks, including possible loss of some or all of the principal amount invested. Past performance is not indicative of future results, investments can go down as well as up.

“Citi analysts” refers to investment professionals within Citi Research (“CR”), Citi Global Markets Inc. (“CGMI”) and voting members of the Citi Global Investment Committee. Citibank N.A. and its affiliates / subsidiaries provide no independent research or analysis in the substance or preparation of this document. The information on this page has been obtained from reports issued by CGMI. Such information is based on sources CGMI believes to be reliable. CGMI, however, does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute CGMI’s judgment as of the date of this page and are subject to change without notice. This page is for general information purposes only and is not intended as a recommendation or an offer or solicitation for the purchase or sale of any security or currency. No part of this page may be reproduced in any manner without the written consent of Citibank N.A. Information on this page has been prepared without taking account of the objectives, financial situation, or needs of any particular investor. Any person considering an investment should consider the appropriateness of the investment having regard to their objectives, financial situation, or needs, and should seek independent advice on the suitability or otherwise of a particular investment. Citi Research (CR) is a division of Citigroup Global Markets Inc. (the "Firm"), which does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this information. Investors should consider this information as only a single factor in making their investment decision.

Opinions expressed herein may differ from the opinions expressed by other businesses or affiliates of Citigroup, Inc., and are not intended to be a forecast of future events, a guarantee of future results or investment advice, and are subject to change based on market and other conditions.