The subject of the UK's access to the single market has been discussed heavily since the EU Referendum vote and is a key topic in Brexit negotiations. Today's report discusses recent developments and looks ahead to other events that could affect GBP rates this week. The table below shows the market movements for a number of currency pairings yesterday:

Currency Pair% ChangeDifference on £200,000
GBPEUR0.4985%€1120
GBPUSD0.7215%$2020
GBPAUD0.6482%AUD 2300
Prime Minister Theresa May is currently ‘clinging to power’ according to reports. On Monday, it emerged that she had survived two votes on the customs bill and faced backlashes from pro-Brexit members of her own cabinet after they felt she caved into demands. The political pressure is not about to let off as parliament yesterday debated on trade and how this should look after the UK leave the EU. Theresa May managed to survive a bold bid from Tory rebels yesterday to create a customs union with the EU if the trade deal failed. Conservative MP’s were warned yesterday that if amendments to the trade bill were voted for, this could have led to a vote of no confidence for the PM and potentially an early general election.

Worries over single market access for UK Financial Sector

One of the key factors in Brexit negotiations is over the future of single market access for the UK’s financial services sector. Bruno Le Maire, the French economy minister has taken a tough stance on Brexit negotiations. He has stated there is little chance of the UK securing a free trade deal for financial services that would provide the level of access wanted by Britain’s largest tax paying sector. Le Maire said that British finance companies would have to rely on a legal mechanism known as equivalence. Equivalence allows countries outside the bloc to access the single market in limited circumstances, but access is not consistent and can be revoked at short notice.

Under current passporting laws the UK can have access to the single market, but this is expected to end when Britain leaves the EU in 2019.

The UK is proposing a mutual recognition system so financial service firms will keep access to the EU on the premise that each side preserve regulatory standards with the best international standards. The French are not keen.

The French would stand to benefit from any move away from London as Europe’s financial service focal point. This certainly does not bode well for Brexit talks and could cause Sterling weakness.

UK Manufacturing and Industrial Production could influence Sterling

The most influential data releases for the Pound will come on Friday in the form of Manufacturing and Industrial Production. There is expected to be a substantial rise in Industrial production month on month (MoM) figures. They are expected to move from – 1.3% to 1.1%, if this significant rise does not occur the Pound could suffer.

For further information on how future data releases could affect exchange rates call our trading floor on 01494 725 353 or email me directly at dcj@currencies.co.uk.

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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.