Brexit Talks and Average Wage Growth set to cause volatility for Sterling (Daniel Johnson)

Brexit Negotiations continue to dictate the Pound’s value

Theresa May will be in with her cabinet minsters this week at Chequers until they have set out the frame work for a Brexit plan that includes a high level alignment between UK and EU laws.

May hopes to unite leavers and remainers from her cabinet in order to push forward Brexit negotiations. She will attempt to reassure Eurosceptic ministers that Britain will be able to move away from EU rules over time under “managed divergence”.

They are expected to have the outline for the Brexit plan by the end of play Thursday. May is due to make a speech next week detailing her latest proposals for the future relationship with the EU. This will no doubt cause volatility on the markets.

Phase Two of talks currently look like they are going to be problematic. The EU has warned the UK that Britain cannot expect full single market access after exit. Brussels has stated it will oppose any deal that allows the UK to undermine the level playing field by cutting regulations.

May has threatened to cut regulations and taxes should they fail to come to a trade agreement. She stated that if the deal offered by Brussels is not in the UK’s interests she will scrap the current European economic model and put in place “competitive tax rates and policies that would attract the world’s best companies and biggest investors”.

It looks as though we could see Sterling weakness when talks continue based on the uncertainty on how they will proceed.

Tomorrow’s Unemployment and Average Wage Growth data could create an opportunity for Sterling sellers

Unemployment data has been impressive of late close to it’s lowest levels since records began more than forty years ago. Average Wage Growth will be the key data release as in order to have a healthy economy inflation and wage growth should be close to parity, they currently aren’t. Inflation has risen rapidly since the vote to leave the EU due to the weak value of the pound. Expectations are for year on year wage growth figures to come in at 1.5%, if figures land away for m expectations we could see swings in Sterling value.

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