Sterling continues to fall following Theresa May’s comments (Daniel Johnson)
Sterling has a rough start to the week
Following Theresa May’s comments this weekend, where she hinted toward a hard Brexit sterling has fallen heavily with GBP/EUR sitting in the 1.14s and GBP/USD in the 1.21s. She stated during a Sky News interview that she would consider giving up free trade for control over immigration.
I think more important however will be the ruling in regards to the supreme court judgement on whether parliament will get to vote on the triggering of article 50. If parliament do get the vote it is probable there will be a soft brexit, with temporary trade deals in place while negotiations take place. This eventuality should cause the pound to rise.
If parliament do not get the vote a hard brexit becomes the probable outcome and this could result in trade negotiations being troublesome and elongated. Sir Ivan Rogers, the UK ambassador to the EU recently resigned due to what he considers to be unrealistic estimations on how long brexit will take. The current target for a full exit from the EU is two years, Sir Ivan thinks it will be nearer ten.
I would expect the the supreme court ruling to come through between the 12th-17th January, keep your eyes on developments on the case as this could have major implications on the value of the pound.
UK data releases that could effect Sterling short term
Tomorrow will see the release of UK manufacturing data where I would expect to see an improvement which could cause some respite for the pound. GDP figures are also released on Wednesday and I would again expect a slight improvement. Please be aware however that any news from the supreme court judgement is likely to outweigh these data releases.
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