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26 August 2003

EZA 550 - Euro Sterling




UK on course toward euro despite probable Sweden rejection
The internal position of the UK government of Prime Minister Tony Blair toward euro entry for sterling has changed. Our sources indicate a definite shift towards 'when' there will be a referendum rather than 'if'. The decision has been made; timing is the sole outstanding issue. During and after Swedish euro referendum this is important for clients to note. If Sweden rejects the euro on Sep. 14, this will hinder London from calling a euro-entry plebiscite in this legislature but will not divert from a course toward a UK vote and sterling entry before Blair leaves office altogether. If the level of campaigning on the euro increases after the summer break this will indicate the topic is high on London's agenda. A momentum has been developed and policy moves will follow. Chancellor of the Exchequer Gordon Brown is genuine about wishing the UK to be in the euro, our information indicates. And importantly, Blair will not leave office voluntarily until Britain is in. Although the UK government is encountering a tough political patch, even before the David Kelly affair and Hutton enquiry, stories about Blair resigning are unlikely to be true.

SummaryAsset Conclusions: GBP-euro gains to be bolstered short term on Swedish referendum but UK government referendum plans means weakening later

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© Graham Bishop

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EZA550.pdf


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