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Sterling ticks higher, but remains vulnerable

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08/12/2017
The pound has ticked up to its highest level in six months after an apparent break-through in the Brexit negotiations.

Agreement on EU citizens’ rights, the Brexit divorce settlement and the Northern Irish border will allow the government to push ahead with phase 2, which includes negotiations on new trade agreements.

Sterling hit €1.1475 against the euro, and $1.347 against the dollar in today’s trading.

Sterling has been buffeted by political shifts since the Brexit vote last year. It has proved a barometer of sentiment towards the UK economy. For much of Theresa May’s premiership, the pound has been falling as international currency investors have worried about the impact of Brexit on the UK economy.

Holidaymakers heading abroad for Christmas should capitalise where they can. ETX capital has compared the immediate impact of Theresa May’s speeches on the value of the pound, demonstrating how quickly sentiment can turn:

Announced as Prime Minister – 13 July 2016
The week after the UK voted to leave the EU, the pound hit 31-year lows against the dollar but by the announcement of her premiership, it had recovered to trade at $1.32. The fact that Theresa May had supported the Remain campaign was welcomed by investors.

Brexit date speech – 3 October 2016
While outlining her timetable for starting Brexit negotiations, the pound fell to a three-year low against the euro by over 1% to €1.14 but it had recovered very slightly by late evening. Meanwhile, the pound reached its lowest rate against the US dollar since July 2016, falling by almost 1% and reaching $1.2797.

Lancaster House speech – 16 January 2017
At the Lancaster House Speech where Theresa May revealed her plans for Brexit, sterling advanced across the board, climbing by over 1% against all the majors (and over 2% against the US dollar).

World Economic Forum – 19 January 2017
Theresa May’s speech in Davos, Switzerland, gave the pound a boost, reaching a midday high of $1.2336 against the dollar. By the end of the day, it had settled below $1.23.

General Election announcement – 18 April 2017
This speech confirmed that the Prime Minister would present a motion to the House of Commons, calling for a snap General Election. Initially sterling dropped significantly but had pulled higher by more than 1.2% to trade at $1.27, its highest since December 2016.

First Brexit speech – 17 July 2017
This was Prime Minister May’s first speech outlining her plans for Britain’s exit from the European Union. The pound rose 2% against the US dollar and climbed to €1.14 against the euro.

Florence Speech – 22 September 2017
After the Prime Minister outlined her proposal for a two-year implementation period of Brexit, the pound ended the day down 0.4% against the dollar, while it decreased by 0.54% against the euro, reading €1.1310

Conservative Party Conference – 5 October 2017
In the wake of Theresa May’s keynote speech at the Conservative Party Conference, the pound dropped by 0.4% against the euro.

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