Will the Pound Strengthen after Theresa May Speech? (James Lovick)

The pound has taken losses this week as Brexit uncertainty continues to be the main driver for sterling exchange rates. Rates for GBP EUR have fallen to 1.1290 this morning whilst The EU commission put forward draft proposals yesterday that could effectively annex Northern Ireland from the United Kingdom by keeping NI in the single market. The issue of Northern Ireland remains and UK Prime Minister Theresa May has been to speak with EU Commissioner Donald Tusk today.

Ex-Prime Minister Tony Blair is also expected to make a speech from Brussels later today highlighting how political the situation has become following a speech from John Major yesterday all ahead of the eagerly awaited speech tomorrow from UK Prime Minister Theresa May. Political tensions across the spectrum in the UK and in the EU are fraught over Brexit at the moment and any developments here are likely to see further market reaction. Clients looking to buy pounds at the moment are benefitting from this latest bout of sterling weakness which has created a good opportunity to sell Euros and also sell dollars.

Any developments which offer some clarity for the future path of Brexit particularly where the Irish border is concerned is likely to see major market volatility. A strong and well received speech has the potential to see a good spike for the pound creating a good window of opportunity for those clients looking to buy Euros or dollars.

There is a risk of course that the pound could fall materially lower tomorrow if the response from the EU is negative and pushes the prospect of a no deal scenario closer. This scenario would be unattractive for the UK and would almost certainly see the pound weaken. Friday’s speech has the potential to be a big market mover and could see considerable opportunity.

UK mortgage approvals saw their biggest surge for nearly three years signalling life in the market but went largely unnoticed ahead of the speech tomorrow. The higher number is likely to be as result of the interest rate increase from the Bank of England last Autumn and the likelihood of higher borrowing rates going forward.

To discuss how these developments are likely to impact on your own currency requirement then please feel free to make contact with me at [email protected]