As morning broke in the UK there was some positive news that Prime Minister Theresa May would give lawmakers some scrutiny of the Brexit process. More importantly, it was reported that Britain would seek ‘maximum possible access to Europe’s single market’. On the back of this we saw sterling push higher against its counterparts.
However, during Prime Ministers’ Question time we saw the currency give up its gains it had made as May promised to be ambitious in Brexit negotiations and to exert greater migration control. It was these comments that saw sterling suffer, given the tone of current EU partners with regards to the single market and immigration. The tone was once again of hard negotiations from the UK as well as disunity within Parliament. This suggests that we have a long way to go and with so much uncertainty of the outcomes, sterling is under constant pressure. Unfortunately, this puts a great deal of uncertainty in the path of both UK importers and exporters.
Meanwhile, Bank of England (BoE) Deputy Governor Jon Cunliffe stated that while data since the Referendum has been more positive than anticipated, the underlying narrative remains worrying. Cunliffe went on to state that ‘uncertainty about the UK’s future trading agreements with the EU and the economic impact of that’ this will, in turn, reduce investment and affect consumption and housing in the course of the next year.
Looking to the day ahead we have BoE Governor Carney speaking at the future forum, in Birmingham. As head of the central bank, which controls short term interest rates, he has more influence over the nation’s currency value than nearly any other individual person.