Political risk has dominate proceedings at the end of the week, with Theresa May delivering her speech at Mansion House looking outlining her plans to get the deepest possible free trade deal achievable. The speech today comes after Donald Tusk warned during talks with Mrs May on Thursday that there could be no frictionless trade outside of the EU and that friction was inevitable. All of this is in a week that has seen US dollar gains and downside in Cable.
The PM has of course already ruled out the UK staying within the single market and customs union after Brexit, but the real stumbling block will come after the EU announced a plan earlier in the week to keep Northern Ireland in the union to avoid a hard border with the Republic of Ireland. What will help Sterling will be strong leadership and a strong stance from the PM.
In her speech today the Prime Minister set out her 5 rhetorical tests that the UK would look to, she ruled out a deal similar to that of Canada and Norway. However, all in all this was a nothing speech that gave very little insight or very little clarity on the matters that have already caused big market swings this week.
The pound and Euro were largely unaffected by the performance and only really paid attention when the PM started to discuss the Irish border or the lack of it. Again here there were no surprises with the PM saying she was not going to let the Brexit deal jeopardise the years of hard work and positive relations Ireland.
However all in all this speech was very much like the rest of Brexit, a lot of noise but no real substance. We are no clearer now than we were before the PM’s speech, and the pound and Euro showed that by their lack of interest and movement.
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Sometimes you have to throw conventional wisdom out the door and just let the good times roll