Sterling continues to drop on PMs comments re Brexit

10 January, 2017

Sandeep Dugg

Yesterday the pound had fallen to its lowest level against the US dollar for two months after weekend remarks by Theresa May appeared to add to the likelihood of a hard Brexit. Sterling also fell more than a cent lower against the Euro.
In her interview she highlighted her priority is to negotiate the best possible UK/EU trade deal rather then finding ways to keep bits of membership intact. Speculation that the Supreme Court will release its judgment this week on whether the UK government should seek parliamentary approval before triggering Article 50 talks and could see more volatility expected over the course of the week.

Eurozone unemployment was unchanged at 9.8% and was also in line with market expectations and the rate was the lowest rate since July 2009, German unemployment held at a record low of 4.1% and France rate fell to 9.5% from 9.7%. These figures certainly puts some pressure on the ECB to maintain very aggressive monetary policy in an attempt to support demand.

Data for rest of the week
US – main release of note is Retail Sales data for December due out Friday afternoon, after a disappointing November figure, sales are expected to have put in a stronger performance during December, which should help to lift the dollar.
UK – monthly and industrial production data due out on Wednesday; but overall, Sterling remains vulnerable to further Brexit developments.