British Pound Sinks 1.5% Against Dollar on Sunday as Theresa May Seeks "Hard Brexit"

The British pound opened down approximately 1.5% against the dollar in early trading, Sunday. At it’s lowest, the pound was trading at 1.1995 against the greenback, before gaining some ground in the hours following the opening of the Australian currency markets.

The precipitous fall in the pound was spurred by press reports that suggest Theresa May is looking to leave the EU single market and customs union - a major point of contention in the Brexit negotiations - in order to regain full control over UK immigration policy.

The British MP is scheduled to give a speech at London’s Lancaster House, on Tuesday, in which she will make the case for a clean breakaway from the European Union and a more united Britain.

“So the country is coming together. Now we need to put an end to the division and the language associated with it – Leaver and Remainer and all the accompanying insults – and unite to make a success of Brexit and build a truly Global Britain,” May is expected to say on Tuesday, according to a Sunday Telegraph report.

Many financial firms based in the UK have made it clear they plan to move to Ireland and the EU if Brexit negotiation fail to preserve single market and passporting rights for British firms.

LMAX, a London-based and FCA-regulated FX marketplace, issued a statement in October, 2016, saying the firm plans to leave the UK in 2017 if Brexit negotiations break down:
“LMAX Exchange will begin regulatory filings in Ireland in January 2017, if no UK Government assurances are received.”
Statements by firms like LMAX regarding the repercussions of a “full Brexit” are very much at odds with some parts of the MP’s planned speech on Tuesday, “Business isn’t calling to reverse the result, but planning to make a success of it,” May will say.

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1 comment :

  1. Dramatic headline, but within what can be regarded as normal trading ranges. Expect to see volatility in both directions as companies hedge their bets for the coming months.

    Given all the economic uncertainty at the moment, what with President Trump about to take office, May having to have to find some kind of deal to please the voters and the financial institutions, the European Union trying to find some kind of consensus, and China and Russia both flexing economic and military muscle, a degree of volatility is to be expected.

    In all events, from a British point of view a lower value pound means greater export strength. Unfortunately that is countered by a probable visible explosion in food prices in the UK. Bad weather in mainland Spain, the area from which Britain imports most of its winter fruits and vegetables, means low crop yields which will soon filter through to the domestic market. Politicians being politicians will no doubt blame everything on a conspiracy in the EU. More realistically, expect downward pressure on the pound V the Euro, as the need to buy Euros forward for the British market comes into play.

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