Theresa May finally provided much more clarity on what exactly the UK’s Brexit strategy would be. In a speech in the capital which offered much a more transparent summary of the UK’s exit process and the UK future relationship with the EU. Her words ensured The Pound Rallied, finally regaining some of the ground lost following the last few weeks, most recently the Prime ministers sky interview last weekend.
Theresa Mays Objectives
As highlighted in her previous interview she put great emphasis on the UK’s desired control of its borders and creation of its own national laws. Highlighting that she thought would deliver a clean but gradual transition away from the EU accepting that the UK would forego access to the single market. Howe
She also sent a clear message to the European Union advising against a lack of cooperation or rough justice stating ‘’I know there are some voices calling for a punitive deal that punishes Britain and discourages other countries from taking the same path’’
Stating the UK sought to continue being ‘’ A good friend and neighbour in every way’’. May concluded by saying that harsh rejection or dismissal of her plan would bear significant consequences for the whole of Europe and wouldn’t be ‘’The act of a Friend’’
May also claimed that she wanted and arrangement relating to the future of the relationship with the EU before the UK’s EU membership planned departure date in early 2019. Therefore, allowing companies, the financial services sector and to act in their best interests.
Relating to Business with interest in Europe May also outlined her desire
She then began laying out the 12 key objectives of her Brexit plan to ensure the UK’s move away from the European Union membership is smooth and measured.
The Brexit 12-point Plan
Reaction from the EU
Shortly after the Prime minister speech to the nation, her overview of the Brexit 12-point exit plan and a short debate chaired by David Davis in the house of commons the world looked to EU member for comment.
The first responses came from the German minister Frank Walter Steinmeier who welcomed the Brexit plan saying that it provided Europe which much more clarity, commending May decision to maintain a level of cooperation with the EU.
A day later European Commission President Jean Claude Juncker allayed fear slight of Hard Brexit stating that the EU was not in a hostile mood after May confirmed that she would not accept a ‘punitive deal that punishes Britain’.
Juncker later spoke in Malta stated on Brexit that he welcomed the clarification provided by May’s 12 point Brexit plan, but ensured no negotiation would begin until article 50 was triggered.
How the Pound rallied and why?
During May’s speech the Pound rallied briefly, breaking above 1.16 against the Euro. Although leaving the single market in particular would be viewed negatively by markets. The real benefit of Theresa Mays speech was that regales of its content it finally provided some clarity and right or wrong a strategy. It also ensured that any formal plan would have to be approved by parliament which should provide an extra level of thought, detail and diplomacy.
The pound rallied briefly during the prime minister speech with GBP/EUR touching a 1.1583 moving from 1.1372 just a few hours before. Currently GBP/EUR is sitting around 1.1558 around have been able to hold on the majority of its gain. No Doubt also being helped along by encouraging UK inflation figures and positive jobs news which followed the speech days later.
GBP/USD also saw gains and the Pound rallied to break the1.24 point the pound’s largest single day movement since 2008. It closed the weeks trading at 1.2337 maintaining strength from a pre Speech 1.2023.
Although comments from members of the EU following Theresa Mays speech, ensuring they look forward to open and civil negotiations will provide some comfort. The real reaction will only follow the triggering of Article 50 by the UK. Naturally the European members will be conscious that the UK are currently the second largest however if no common ground on key term can be found the outcome of a Hard Brexit will clearly affect all.
If you or your business are considering exchanging GBP over the next few month and feel you would benefit from guidance. Please feel free to contact us on [email protected]