The pound over the last few weeks has weakened to levels not seen for decades and many of the drops have followed political speeches from both the UK conservative party and other EU presidents and ministers within the Eurozone. UK data has hardly missed a beat however GBP news is currently being dominated by politics and sentiment rather than the Key data that typically drives movement.
Over the last few weeks the Sterling has dropped significantly. Initially the losses began when Teresa May spoke on the BBC show with Andrew Marr where she claimed that article would indeed be triggered by the end of March, initiating negotiation to depart the European union. A process which many estimate will be task which could take in excess of two years. Uncertainty therefore flooded markets.
The trading week that followed saw the GBP/EUR plummet from 1.132 to 1.1131 in hours sparking a mass selloff.
The pound’s weakness was magnified further by news of a ‘computer glitch’ during Asian trading which saw the GBP/USD lose roughly 6% in just a matter of minutes
Who caused Sterling sell off?
The cause was found to be initiated by comments from The French prime minister Francois Hollande stated that the UK would have to suffer for the Brexit. These comments were interpreted by trading software as a lack of willing negotiation or ‘Hard Brexit’ as it has now been labelled. This GBP weakness then triggered a number of currency orders and the price slid sharply.
Theresa May attempts to stabilise Sterling
May did her best during prime minster questions to remain strong and upbeat proclaiming that the conservatives would listen to the UK public particularly in relation to concerns over immigration. However, wanted to remain Ambitious in the negotiations seek the best deal with the EU. Stating her objective was ‘‘maximum possible access’’ yet be free to pursue other trade opportunities. Although May unfortunately did go far enough to state that access to the Single market would be guarded which inevitably would curtail sterling’s rapid depreciation.
Sterling has also been hit significantly due to the stiff adversity that Scotland has voiced with Nicola sturgeon tabling the idea of another potential Scottish independence referendum. In a further act of defiance sturgeon highlighted that the likes of Liam Fox and Boris Johnson were unsuitable to represent Scotland.
Speaking today on the Andrew Marr show Sturgeon said she felt positive about Scotland having the ability to negotiate its own terms and trade arrangements saying ‘it’s possible’’ continuing that the party would ‘’publish proposals over the next few weeks’’.
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