### POV: LABOUR'S BREXIT POLICY SHIFT CLOSE...>

CABLE: ### POV: LABOUR'S BREXIT POLICY SHIFT CLOSE TO MEANINGLESS FOR MARKETS

-While the switch may embolden Labour MPs (and cross-party remainers) to vote

against the government, it does little to unite backbenchers who have cited

numerous Lords amendments that, if voted for on June 12th, could force the

government to consider retaining EEA membership and forge a stronger cross-party

resistance to current Brexit plans. As a result, this does little to raise the

possibility of the government losing meaningfully at the bill's passage.

-Yesterday, the opposition Labour Party shifted policy, favouring "full access"

to the EU's Single Market and aiming for the "softest Brexit possible". The

announcement prompted a rally in short-end GBP implied vol and risk reversal

measures as traders saw an increased possibility of the Cabinet softening their

Brexit stance.

-Consequently, the demand seen for GBP upside protection today may be caught

offside. Labour's U-turn does very little, if anything, to make the cabinet's

interpretation of Brexit less likely. RISK: only a vocal climbdown by key

cabinet members will strengthen the 'softest Brexit possible' rhetoric.