Goldman Sachs: Hopeful For A Deal Despite Tough Talk

Goldman Sachs note that "Brexit negotiations have kicked into high gear again. And with that, so has the public posturing that positions are immovable and negotiations might break down. But markets have become more accustomed to this process by now, and seem more willing to dismiss the noise as long as the sides are still talking, at least in private. While we recognize that the negotiations appear to have become more acrimonious, and deadlines really are approaching, we still think the UK and EU are on a path towards coming to a "thin" agreement over the next few weeks. We note that the threats to withdraw have so far come with caveats, and leaders appear to have preserved options to deescalate if needed. Therefore, we continue to recommend that investors stay the course, going short EUR/GBP with a target of 0.87. Over the near term, our main concern is that most investors in our conversations appear to have a similar view after the experience of 2019, so if this is more than strong rhetoric, we believe it will likely come as a surprise to most."