The following is based on research by Martin O’Rourke, Managing Editor of TradingFloor.com / Saxo Bank. More of Martin’s research can be seen at Saxo Bank’s TradingFloor.com.
- Prime minister Theresa May delivering key speech on Brexit
- May outlines 12 objectives to Brexit delivery
- Control of immigration and UK laws underpin address
- GBPUSD more than 100 pips to 1.2250 area
- FTSE 100 slipping as sterling shoots higher
Now perhaps we have some direction after Theresa May tried to flesh out a vision.
GBPUSD has spiked more than 100 pips during UK prime minister Theresa May’s keynote Brexit speech Tuesday.
The speech, underpinned by a prioritisation of the UK’s control over immigration and UK law, is the clearest statement of intent yet from the prime minister in the near seven months since the UK vote to leave the European Union on June 23.
What I am proposing cannot mean membership of the single market,
said May, speaking in London. “Because we will no longer be members of the EU…the days of the UK making vast contributions to the EU will end.”
May was at pains nevertheless to strike a conciliatory tone with her EU partners saying:
We are leaving the EU but we are not leaving Europe.
“We want to get out into the wider world with countries like Brazil, China and India,” she said. “President-elect Trump has said Britain is not at the back of the queue when it comes to striking a trade deal…but I do want us to have a customs agreement with the EU.”
GBPUSD spiked more than 100 pips as May’s speech unfolded indicating her address was largely priced in by the Monday plunge in sterling.
May wants a clean break from the EU,” said Saxo Bank’s head of forex strategy John J Hardy. “Not any partial, associate or half-in, half-out membership.”
Sterling spikes against the dollar
GBPUSD jumped beyond 1.2250 after May began talking. Internationally-dominated FTSE100 meanwhile slipped slightly as May’s speech unfolded.
FTSE100’s recent upward momentum hits a roadblock
May listed 12 objectives to Brexit but gave little detail as to how she expects negotiations to proceed, but hoped for a “smooth and orderly Brexit that would herald a new partnership between the UK and EU.”
“Those who urge us to reveal more…will not be acting in the national interest because this is not a game or a time for opposition for opposition’s sake,” she said. “It is vital that we maintain our discipline.”
“Trade is not a zero sum game,” she said. “More trade means more jobs and more wealth creation.”
GBPUSD was at 1.2275 at 1235 GMT, according to SaxoTraderGO. Article 50 of the Lisbon Treaty will be triggered by March 31.