UK's May says it's too early to say what kind of Brexit agreement deal will be struck with EU

UK PM May addressing the party faithful at conference 5 Oct

• wants agreement with EU to reflect strong ties with bloc, co-operation on counter-terrorism and support free trade
• after Brexit the Brtain we build will be a global Britain
• will intervene where markets are dysfunctional
• have to acknowledge that there have been some side effects of low interest rates, change has to come

ECB's Stournaras says UK will suffer the most from Brexit

FT: Germany considers changing labour laws to help woo banks away from London

Looking for a post- Brexit banking job in the UK? It might be time to brush up on your German.

• Germany is considering changing its labour laws to make Frankfurt a more attractive hub for banks
• However ... leading Wall Street banks indicated this weekend that they were more likely to relocate certain operations to New York than the eurozone if they shifted them from London

Brexit takes its first trip to court this week

The first of the Brexit legal challenges heads to court on Thursday

Apart from arguing with her European counterparts, PM Theresa May also faces challenges over Brexit from inside the UK. The first of those goes up in front of judges on Thursday. The next is due Monday 17th Oct.

It's not certain how much publicity will be allowed and there's rumours that the press May be banned from the first hearing but there's nothing confirmed and I can't see how they will be anyway.

One of the cases could be from SCM Private, a London based investment fund. Details of the cases back in late Sep.

First Brexit hearing begins in the UK High Court

Three day judicial review of Brexit case begins today

The wheels of UK law go into motion today (not that they ever stop of course, except for elevenses).

The first case to be heard is from Ms Gina Miller of London investment fund group SCM.

The case is challenging what's known as the Royal Prerogative power that Theresa May's government is looking to use to enact article 50. The simple definition is that it's an age old law that the government wants to use so it bypasses parliament. The claimant argues that the government cannot lawfully use this to enact article 50;

The review is to be held over three days, today then & 18th and we've been reliably informed that it's doubtful that we'll get any comments from the review today as they will be just going over the arguments. It's highly likely that we may not hear anything until the hearing is concluded next week.

The review does have the potential to be market moving if it is decided that there's a case to proceed with. At this point, this is just to see whether there's merits in the claims. From there it's possible that it will go on to become something that will require a full legal challenge.

Keep hitting GBPUSD rallies say Nomura

The market's acceptance of a hard Brexit should see the pound remain under pressure

According to Nomura, the market has gone through 5 stages of Brexit grief and has now settled on a hard exit. Although the market may be accepting that now, it doesn't mean the end of the drop in the pound.

"The rhetoric from ministers with "red lines" on immigration has considerably lowered the possibility of a "Soft Brexit" in the market's pricing and we have moved more towards the "Clean Break" or "Hard Brexit" outcome. With the market's acceptance of this it has naturally seen GBP suffer. But it is more than just that. It has changed the dynamic we see between UK rates markets and FX that leads us to conclude that we have not yet seen the bottom in GBP, with portfolio inflows less likely to provide the necessary inflows to the UK to plug the current account deficit"

"From these levels it is less attractive for some to enter fresh shorts, but given the new market dynamic we continue to recommend selling GBP initially to 1.20 and further and for EUR/GBP to break above 0.92."

They were wary of a 3-4% squeeze before the flash crash but now say that the decks might have been cleared so that any bounce might not be as big as previously expected.

"So if there is any rally it should be shortlived and will be used by the market as an opportunity to sell at better levels unless of course it is due to a complete reversal of position from politicians on the current "Hard Brexit" stance."

There's no doubt that the selling pressure remains and the shorts have the pound firmly by the short and curlies. The short term charts are still developing and last week's lows around 1.2080/1.2100 will be the first target for another attempt at pushing the pound a whole lot lower.

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Expect London banks to move some operation to Frankfurt in the second half of 2017 says Germany

This time it's the Frankfurt Financial Centre chief

He's also been told by banks that they will move some operations to Frankfurt and he expects them to start doing so in the second half of 2017.

Brexit: the hard and soft facts and the myths.

As part of Project Fear David Cameron threatened that he would trigger Article 50 immediately if there was a Brexit majority in the referendum. At the time this was interpreted as a "Hard Brexit". Theresa May has gone for the "Soft Brexit" which means that after 10 months of careful negotiation the UK will trigger Article 50 by March 2017. There should be no further reference to "Hard Brexit" as this is as soft as it gets.

Although we are well into the discussion stage of leaving we still hear siren voices telling us to reverse our decision and stay in the EU. Clutching at straws there is a strong lobby saying that we cannot exit until it has been debated in Parliament and voted for by our elected representatives. This is in spite of the fact that the referendum was undertaken to tell our elected representatives the will of the people. In one sense it should be a nod through for Parliament, but a lot of people are concerned that if this decision is left to our elected representatives then it will be overturned as every piece of weak news about the UK economy is attributed to the decision made to Brexit and all but a few politicians are likely to be led by their own self-interest.

 Already politicians are blowing-off steam about how more evidence has now come to light that Brexit will be bad for the UK economy and in the best interests of their electorate they feel they must now vote against Brexit. A politician`s life is short and full of risk and most of them will fall off the gravy train long before their working life is over and it is nice for them to think there is another lucrative gravy train to jump aboard and this incentivises many of them to justify a volte face.

As well as the politicians, the backroom bureaucrats are missing the point about leaving the EU. I spoke to several top members of HM Customs and Excise who are off to Luxembourg this week to unravel hundreds of pages of trade agreements before they can restart the process of renegotiation. I asked them why we are not just scrapping all trade agreements which interfere with price or quantity and why we are not offering free trade across the world. Starting with a clean slate will allow us to deal, case by case, with any problems that manifest themselves. There was a stunned silence. This approach could apply equally to all EU countries with whom we will continue to trade freely and if the EU does not want to play the free trade game then they need to look at the cautionary tale below.

The chocolate, cheese and wine myth.

Today Nick Clegg has pointed out that the price of EU cheese, chocolate and wine will soar if we go for a "Hard Brexit". I think we need to ask the consumer about this. As there are many substitutes for EU cheese I can see a win/win for the UK cheesemakers. Wines from around the world including England are as good if not superior to EU wines and Swiss chocolate is my favourite. So what will actually happen is that EU producers will be forced out of the UK market or they will have to absorb the tariff. EU producers will in turn put pressure on the EU policymakers to remove all tariffs as the only people who lose in this situation are producers in EU countries.

The falling value of sterling myth.

Remove all the noise about Brexit and it has been clear for some time that sterling is destined to fall and continue falling in value. I explained this before Brexit in my blog "Current account deficit on the balance of payments is the most damming statistic". At present this deficit is 7.6% of our GDP and the market will bring down the value of the currency, as did the lowering of Bank Rate by the Bank of England, until our export prices are sufficiently low and import prices sufficiently high to rebalance our external account. Daily fluctuations are determined by rumour, manipulation and misinterpretation of current statistics. However in the long run it is the current balance deficit that points the currency in a downward direction and the sooner it happens the quicker the problem is resolved. If fear pushed the currency lower quicker after Brexit then we need to look upon this as good news.

A Brexit induced rise in inflation myth.

As Friedman said inflation is always and everywhere a monetary phenomenon. Inflation is more units of a currency used in the same number of transactions. A falling pound, rising import prices, higher food or oil prices only change relative prices. For the average level of prices to rise there must have been a preceding growth in monetary demand. The prices described above are only symptoms of the inflation caused by the Bank of England`s monetary policy more than a year ago.

Brexit and the Stock Market boom myth.

Brexiteers have claimed the Stock Market boom as a success but, as much as I would like to, the real advantages to economic growth of Brexit are sometime ahead. Asset prices hitting a peak is just the inverse relationship between interest rates and asset values. The Bank of England lowering interest rates has caused asset prices to rise and it will be reversed when interest rates start to rise.

Brexit has had nothing to do with asset bubbles. They are the result of a misguided Central Bank policy as I explained on my blog in "A reappraisal of interest rates and market interest rates"

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Richard Branson on Brexit: "We're already seeing disastrous consequences"

CNBC (with Reuters) report on an interview with Richard Branson, Virgin big wig:

• "We're already seeing disastrous consequences with the way the pound has dropped. This is a number of years before Brexit actually takes place
• There's been very, very little to be gained from it and there's been an awful lot to lose from it."

Germany said to close the door to back channel Brexit negotiations - Bloomberg

• Officials have said to have been told to shun UK contacts

The pound has dropped but be careful as Bloomberg headlines of late have been very iffy on conjecture.

Further details now;

• Merkel's Chancellery is receiving UK diplomats but is refusing to grant UK any favours in advance of official negotiations
• Some ministers have been instructed to shun official contacts with UK that could reveal negotiating positions
• German message to UK in private remains the same as in public
• Merkel's core message to UK has been consistent