Following Theresa May’s admission that the UK would prioritise its liberty to decide on who does and who doesn’t enter the UK over the its access to the Single market the GBP slipped to a two-month low.
During an interview with Sky News Prime Minister May highlighted that the UK’s priority was to get the best possible deal for the nation even if this meant sacrificing access to long standing trade deals, emphasising that the UK would be leaving the EU and would not remain a member. Markets quickly perceived that this could indeed mean a complete separation from the EU, spurring new fears of a Hard Brexit. Following the comments, the GBP slipped to a two-month low erasing the last few months’ gains made following UK decision to leave the EU, which saw the pound crash to 30+year low against the Dollar.
May’s comments which stirred concern that the UK could be heading towards a Hard Brexit following her dismissal of the UK keeping parts of the EU membership saw the Pound quickly devalue.
Conservative MP’s seek Brexit clarity
Following May’s comments over the Weekend Senior Tory member and Treasury select committee Andrew Tyrie has insisted a detailed Brexit plan is needed in order for both the Parliament and public to be best advised. The senior member also wished for further clarity on whether the UK would seek a gradual exit from the EU or prompt exit.
Furthermore, to MP Tyrie’s comments Chancellor Phillip Hammond clarified again that as yet no decisions towards the retention or departure of the single market had been made. Instead he emphasised that Britain’s key objective was to deliver and agree a deal in just a couple of years’ time.
The reason why GBP slipped to a two-month low
Many still expect that the conservative government and Brexit negotiation team will attempt to ensure that fruitful relations between the UK and the EU will continue and one would imagine that this would include a level of access to the single market or continuation in some shape of trade deals. Any political comments which endorse or indicate the possibility of a Hard Brexit will be viewed negatively by markets. Following May’s comments, the Pound dropped considerably against the Majors.
On Friday evening GBP/EUR closed at 1.1654, it currently sits at 1.1518 and hit and dropped to two-month low of 1.1435.
GBP/USD fared no better at close of UK trading the GBP/USD sat at 1.2295 following May’s comments it has plummeted to a low of 1.2123 and currently sits at 1.2166.
The next few months could prove challenging for Sterling and it would appear the pound has the scope to fall further. As now current Brexit strategy has been put forward and May’s plans remain vague sentiment following her comments will lean towards the potential of a Hard Brexit. The UK currently remains reliant on the EU partnership it forged in the 70’s and any indication that these arrangements will be jeopardised will surely bode badly for the pound.
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