Sterling hits low on Brexit date
STERLING slipped to a threeyear low against the euro yesterday after Prime Minister Theresa May set a March deadline for the formal departure process from the EU to begin, sending British shares to a 16-month high.
May told her Conservative Party’s annual conference on Sunday that she was determined to move on with the process and win the “right deal”, in a move to ease fears inside the party that she may delay the divorce.
May said she would invoke article 50 no later than the end of March, referring to the EU’s Lisbon Treaty that formally puts the divorce proceedings between the EU and Britain in place.
This means she kicks off the negotiations process before the French and German elections next year and implies the two-year Brexit clock triggered under article 50 will wind down by March 2019, a year before Britain’s next general election.
Worry
While the March deadline offers some clarity to the process and underpinned stocks, many in the market worry that the government’s stance points to a so-called hard Brexit that will see the UK left outside the single market in favour of strict controls on migration.
Though the economy has shown resilience post-referendum, fears of a slowdown in business investment and the wider economy will undermine the pound and the focus turns to possible further easing by the Bank of England in the coming months.
Sterling fell 1 percent to $1.2845 (R17.5906), its weakest since early July and not far from the 31-year low of $1.2798 struck on July 6, just days after the June 23 referendum on EU membership. It hit a three-year low against the euro. – Reuters