020 7898 0500Those pesky wet autumnal leaves continue to leave the path of Brexit slippery and precarious. With no major data released yesterday, the movement lower from sterling was in large due to the comments surrounding the UK’s future position in Europe. The foremost concern from sterling investors wasn’t the seasonal wind and rain but comments from influential German Chancellor Angela Merkel, who stated that there was a growing reluctance to grant any special trade relations to the UK once it leaves the European Union. In addition, Merkel went on to state that allowing exemptions to EU rules on migration would lead repercussion across the Eurozone and a ‘free for all’.
The comments continue to spark uncertainty over the path of Brexit and just how difficult it will be for the UK to navigate the minefield in its way. At the recent Conservative Party conference, UK Prime Minister Theresa May signposted the evoking of Article 50 for March 2017. It could be perceived that PM May was indicating that a so-called hard Brexit that would restrict access to the European Union’s single market so that the government can control immigration. Sterling has tumbled more than 3.0% since May’s speech on Sunday.
Looking to the day ahead, the key focus will move back across the pond with the release of the key employment numbers in the US. This number will be deciphered and as a result could have an impact on the interest rate differential between the UK and US and as a result the exchange rate.
