Sterling falls after May’s Brexit speech disappoints

Sterling fell while other markets were unperturbed after British Prime Minister Theresa May, in a key-note speech, outlined the UK’s plans to add new life to the Brexit talks by committing to stay and pay its way in the EU for a transitional period of two years.

“Having been billed as one of the big events of the month, Theresa May’s appearance in Florence also proved to be a letdown,” said Chris Beauchamp, chief market analyst, at online trader IG.

“The speech was big on Johnson-style rhetoric, with plenty of ‘broad sunlit uplands’ stuff that spelled out how the UK wished to be a friend to the EU.

"But beyond that, little else. The pound took a bit of a knock, giving the Ftse 100 room to move higher, but beyond that the market has taken little notice. The focus returns to the negotiations, which should start again next week,” he said.

Sterling fell 0.4% to 87.9 pence and 0.5% to $1.351. Tim Graf, EMEA head of macro strategy at State Street Global Markets, said despite “great anticipation”, Ms May’s speech “offered few specifics and even fewer surprises”.

“The main takeaway for markets is a more formally expressed desire to pursue a transitional arrangement of around two years, from when the time limit following the triggering of Article 50 expires, presumably beginning from March 2019,” Mr Graf said.

“For the near-term, negotiations may likely be hampered by the lack of detail offered on the main items for discussion, namely the Irish border question, the ultimate financial settlement with the EU and the rights of EU citizens,” he added.

The British Irish Chamber of Commerce welcomed any efforts to prevent disruption to UK-Irish trade.