UPDATE: GBP/USD is now down 1.6% on the day as markets digest Theresa May’s message. the Prime Minister has appeared insistent that she will pursue a deal with the EU but market consensus seems to suggest there being little confidence that she will actually be able to secure one.
EARLIER: Key rate movements following Theresa May’s press conference:
- GBP/USD falls 1.45%
- GBP/EUR down 1.15%
- GBP is also down in a range spanning 0.6% to 1.6% against AUD, NZD, CAD, CNY, CHF, JPY, NOK, DKK and ZAR
Theresa May- main points:
- EU, UK a long way apart on key issues.
- No deal is better than a bad deal.
- UK expects respect from EU.
- Must continue to prepare ourselves for no-deal.
- Even in no-deal EU citizens’ rights will be protected.
- Will not overturn results of the referendum.
The Prime Minister also added:
‘Throughout this process I have treated the EU with nothing but respect. The U.K. expects the same” and “at this late stage in the process it’s not acceptable to simply reject.
‘We now need to hear from the EU what the real issues are and what the alternatives are. Until we do, we cannot make progress. Until then, we must and will continue the work of preparing ourselves for no deal.’
EARLIER: The Pound has weakened against all major currencies today following EU heads’ unanimous dismissal of Prime Minister Theresa May’s so-called Chequers plan at a summit in Salzburg.
The sell-off accelerated early in the afternoon, with Sterling losing up to 1.5% against some majors on market fears that a no-deal Brexit is the most likely scenario in March 2019.
Theresa May made statement from Downing Street to reporters in which she said that negotiations had reached an impasse and that ‘no deal is better than a bad deal.’
Immediately before the Prime Minister’s statement, GBP was down 0.9% against USD, 0.7% against EUR and 1.0% against CAD. It wasn’t just the majors either, with the Pound taking a similar hit against currencies as diverse as the Swiss Franc (down 1.2%) and the Hong Kong Dollar (down 1.4%)
There had been some optimism among traders that the unofficial EU-UK summit in Salzburg would bring closure to a number of key sticking points, not least of which was the issue of there being a hard border between the Republic of Ireland and Northern Ireland. However, by Thursday evening it was apparent that leaders would not reach agreement, with Theresa May’s Chequers plan for a ‘soft’ Brexit being effectively dead.