With Theresa May due to give a speech about the Government's position on Brexit tomorrow, how will the Pound react? This report looks at this and other events that could affect Sterling in the coming days. The table below shows the change for a number of currency pairings yesterday:

Currency Pair% ChangeDifference on £200,000
GBPEUR0.9%€2040 EUR
GBPUSD1.05%$2920 USD
GBPAUD1.1%$3980 AUD
What happens next for Brexit and the pound?

As the weather continues to cause havoc and storm Emma hits the UK today the pound has also suffered having fallen lower across the board as political tensions rise in the UK. The Irish border is back under the spotlight after Theresa May has rejected proposals the EU commission has put forward which would effectively annex Northern Ireland by keeping them in the single market. Ex-Prime Minister John Major put forward his case for a second referendum and Tony Blair is expected to make a speech from Brussels today. Theresa May however will make a speech tomorrow and is widely expected to rule out Britain from being part of any customs union with the EU. It is believed the Prime Minister may now have support across her cabinet which could mark a turning point ahead of the trade negotiations which are expected to commence around the end of March. New details are expected to emerge tomorrow which could create substantial market volatility.

Politicians so far have been tight lipped about what the Prime Minister will say during er speech tomorrow and so any new developments or clarity offered on Brexit is likely to see a considerable market reaction.

A positive and well received speech in my view has the potential to see the pound rally and there could be some good buying opportunities on the back of it. If there is such movement then clients may wish to move quickly as gains in these markets have proven short lived so far this year.

When Theresa May gave her Lancaster House speech just over one year ago the pound rocketed by almost 2% against most of the major currencies creating an excellent opportunity for those clients looking to buy Euros and dollars, although those gains did turn to losses shortly after. Clients with pending currency requirements would be wise to get in touch to manage their risk around this important speech.

How the markets respond to the speech will also depend on the reaction from European leaders normally seen very quickly. A frosty response or one that makes reference to “cherry picking” for example is likely to see the pound come under pressure. Theresa May is meeting EU Council president Donald Tusk today and any news here could also see additional volatility.

UK Data – GBP Impact

UK Purchasing Managers Index data for the manufacturing sector is released this morning with expectation for a small drop in the numbers, although still showing expansion in the sector. Official UK mortgage approvals for January from the Bank of England are also released and could see movement for the pound.

Earlier in the week UK Finance recorded an 11% jump higher in approvals so it will be interesting to see if the official data supports these numbers. The jump higher may be more of a blip as a response to the Bank of England interest rate hike in the autumn and future outlook for further rate increases.

On that note the Bank of England Governor Mark Carney will be speaking ahead of Theresa May at 10am tomorrow morning and could create some volatility for the pound.

If you would like to hear more how future events could affect your currency exchange, call our trading floor on 01494 725 353 or email me here.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.