Has Theresa May’s Speech Boosted Sterling’s Performance?

Whilst the past six months have seen the value of the pound tumble, in the immediate aftermath of Theresa May’s speech earlier this week, sterling/dollar rose from £1.21 to £1.23, the FTSE 100 fell and gilt yields rose.

Despite Ms May confirming that the UK will indeed leave the single market – with no real alternative available in order to retain control of immigration and the ability to make our own laws – the speech appears to have relieved some much needed pressure on the dwindling pound. With many businesses already preparing for the eventuality that the UK would leave, alongside the Prime Minister’s desire to negotiate partial access to the customs union, businesses have been offered a level of reassurance that the economy is in a strong position as it pushes forwards with a phased approach to the changes.

However, reports suggest that the single biggest driver of the sterling’s resurgence was the news that any final deal will be voted on by both the House of Commons and the House of Lords, a practice that many feel is much-needed part of the process.

So whilst initial market behaviour signals a step in the right direction for the pound, it is unclear as to whether the sterling’s rise will continue. Just because Theresa May wants to negotiate a free trade with the EU, there are no guarantees that it will in fact happen. It is therefore likely that further currency fluctuations are to come as the negotiations progress and markets react to each new development, just as they have now.

Sources: http://www.independent.co.uk/news/business/news/pound-sterling-value-rallies-theresa-may-brexit-speech-plan-negotiations-a7532036.html
http://www.cazenovecapital.com/uk/financial-adviser/insights/strategy-and-economics/todays-brexit-speech-at-a-glance/
http://us5.campaign-archive1.com/?u=b93ed29b068fc8d82f5e857da&id=b09d1bd2b1&e=3a2c2d7cb4