Following Theresa May’s comments sterling has fallen to a new low against every other major currency. The only currency that it gained ground on was the Turkish lira. It lost a consistent 1% against other currencies.
Although May’s comments were vague yesterday when she spoke on Sky News, and dodged the key question about single market access, many took this as a sign that she was opting for a hard Brexit.
She said Britain could not “keep bits of membership. We’re leaving. We’re coming out. We’re not going to be a member of the EU any longer.”
This morning the pound was down 1.06% against the dollar at $1.2155. Against the euro it was down to 0.89% down to €1.1561.
ETX Capital senior market analyst, Neil Wilson, said, “Sterling is on the back foot on Monday after Theresa May’s comments were taken as a sign the UK government would prioritise immigration controls over single market access.
“Domestic populist politics trumps the trade card for now, it seems, and that is weighing on the pound.”
He went on to point out that the pound could bounce back as the tone of political discourse changed.
RationalFX’s chief executive, said, “The looming fears that the UK might exit the single market continue to weigh down on the pound, and we expect the volatility to continue until further and actual on-ground clarity emerge.
All is not lost for the UK, as the fall in the pound’s value has attracted international market activity and simultaneously boosted the country’s export figures.”
Following the Brexit vote last June sterling has fallen. The weaker pound, however, has made buying overseas British goods and services more viable as they are effectively cheaper than they were. Exports, however, have increased in price.
Inflation is also set to rise as a result of higher export goods. November’s Consumer Prices Index (CPI) inflation rate was 1.2%, up from 0.9% in October and the highest since October 2014, when it stood at 1.3%.