Brexit secretary Davis drives Sterling fight back

The Pound’s revival has continued into December, breaking through the 1.19 mark against the euro for the first time in nearly 3 months. Despite an initial drop as UK manufacturing PMI fell short of expectations, Sterling jumped from 1.178 to 1.194 yesterday afternoon as investors took comfort in the reassuring comments made by David Davis.. The Brexit secretary clarified the government’s stance with regards to the single market, admitting they would consider contributing to the EU budget in order to guarantee the best possible access for goods and services to Europe.

Davis’s speech offered insight into where Britain’s priorities lie with regards to its divorce with the European Union. By seemingly focusing on immigration control over remaining in the EU single market, the government have strengthened Sterling’s stance as a safe haven for investors -Even if it is just short term.

Increased pressure on May’s “bespoke Brexit plan”

Davis’s comments reaffirmed the UK’s search for compromise with Europe, something that has come under heavy criticism from Brexit supporters and only adding to the fog surrounding Theresa May’s “bespoke” Brexit plan.

It is unclear to what extent the government will push for full access to the single market given it will come at a cost –both financial and legal. If the UK were to replicate Norway’s deal, up to 5 billion euros will have to be fronted and more importantly Britain would be forced to adhere to the EU’s free movement of people.

On this point, the office of national statistics confirmed today that despite the government’s promise to control immigration, net migration has stayed near record level highs, standing at 335,000 in the year to June. Although this comes off the back of pre-Brexit figures it is being seen as a failure from the prime minister to act on key Brexit promises.

Furthermore, another set of leaked cabinet letters have added further fuel to the fire exposing May’s plans to put the children of illegal immigrants at the bottom of the list for school places. As a result, the Prime Minister will be put under mounting pressure as the new year approaches to clarify her stance on just how she intends to handle immigration going forward.

All this political uncertainty will no doubt provide short term buying and selling opportunities for people holding sterling. To be in a position to make an informed decision, make sure you get in touch with a foreign currency specialist who can help guide you through these turbulent times. If you are looking to buy or sell currency in the near future but do not currently hold an account with us, call our trading floor on 01494 725 353 or email me here for more information.

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