The latest industrial production (IP) data for the eurozone disappointed last week, with output across the bloc dragged down by Germany and France.
The tug-of-war between trade tensions and easy monetary policy has been evenly balanced so far this year. However, the balance might be shifting as policy shows signs of fatigue and trade war concerns persist despite a Trump Administration decision
Historically, an inverted yield curve has been a useful indicator of recessions. However, quantitative easing may have distorted that signal.
While no deal is not the most likely scenario in our view, the risks are rising. The UK outlook is binary. A Brexit deal could see sterling bounce to 1.40 against the dollar, but no deal on 31 October could see a further slump to 1.10.
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