Market still sees hard Brexit

Sterling markets believe the UK is heading toward a hard Brexit in two years’ time and are preparing for a volatile period over the next few months.

Yesterday marked three months until a key European leaders’ meeting that could shape the final divorce. That means benchmark three-month sterling volatility will start to cover the October 19-20 summit for the first time.

Traders need to gauge how a German election, three months of talks, and political feuds in the UK will change the Brexit outlook by then.