May’s plan sees pound bounce back

THE pound’s value recovered “like a rocket” yesterday as Theresa May set out her Brexit blueprint, confounding predictions that her speech would drive it further down.

Markets appeared pleased with Mrs May promising Parliament a vote on her final deal with the rest of the EU, which observers said was taken as a sign that Brexit “excesses” could be headed off. Commentators suggested that market meltdown over the PM’s confirmation that Britain would be leaving the single market had also been averted by some sly advance leaks to “prime” investors.

Sterling had dropped below US$1.20 in the days before the speech to a three-month low, amid growing speculation that the PM would confirm a so-called hard Brexit.

Ambitious

But as she gave markets more details of her approach, confirming her commitment to seek ambitious trade deals with Europe and around the world, the pound bounced back up by nearly three per cent to above US$1.23, in its highest daily gain since at least 2008, or even since 1998 on some calculations.

The pound had made some gains in early trading after the dollar was weakened by Donald Trump saying US firms could not compete with China “because our currency is too strong and it’s killing us” but remains about 17 per cent lower than before last June’s UK referendum.

Against the EU single currency, sterling added 1.7 per cent, hitting 1.15 euros.

Neil Wilson, senior market analyst at ETX Capital, said: “The pound took off like a rocket today on what amounts to a far less hawkish Brexit speech from Theresa May than many had feared.”

jumped to a two-and-a-half year high last month as the price of air fares and food rose more sharply than expected.