UK: 60% chances of recession within the next 12 months - TDS

Research Team at TDS, notes that the UK Referendum resulted in a win for the Leave campaign, with a 51.8% share of the vote.

Key Quotes

“We see high risks today of a G7/G20 statement before UK equity markets open to try and stabilize sentiment for now, and only if markets ignore that and continue to lower would it seem likely to have direct FX intervention. Liquidity support is extremely likely to be provided today to ensure funding markets remain liquid.

We see the odds of a UK recession within the next 12 months as now 60%. We pencil in year-end targets for GBPUSD of 1.20 and 0.50% lows in 10y gilts, and shift the next Fed hike to June 2017, with a 30% chance of a rate cut but only if downside risks materialize, with these forecasts remaining fluid.”