It’s been a fairly sizable week of declines for both the FTSE 100 and the pound with a souring of global risk sentiment and the latest Brexit developments weighing on the markets. We’ve still got a big event to come before the markets close for the weekend however, with PM Theresa May set to deliver her sixth and final 'Road to Brexit' speech from Mansion House.
Details of future trading relationship in focus
This afternoon’s address will come not long after the pressure pressure on the PM has been ratcheted up a few notches with a series of events this week increasing the difficulty of May’s position. Whilst the the Irish border remains a highly contentious issue there aren’t expected to be any major revelations around this today, with the focus more likely to be on the future trading relationship between the UK and the EU post-Brexit.
One of the main points in the speech is expected to be an attempt to allay fears in Brussels that the UK will attempt to have its cake and eat it with regards future trade and Mrs May will likely seek to acknowledge that Britain will lose access to European markets as she presses ahead with plans to take the country out of the single market and the customs union.
Pound probes lows of recent range
After a strong move higher in the first couple weeks of the year, the pound has consolidated in a range against the US dollar but recent trade has seen the pair threaten to break lower.
Thursday’s low at 1.3710 was lowest in 7 weeks but the cross bounced form here as the buck fell back on reports that the US is set to impose tariffs on steel and aluminium imports next week. This has once more raised the prospect of a trade war and Trump has taken to Twitter this morning to further stoke the fire with additional inflammatory remarks claiming that trade wars are good and easy to win - as well as taking a pot shot at Alec Baldwin for his SNL portrayal of the President.
The past week has seen the GBPUSD rate fall in excess of 1% but there has been larger declines in the pound against the euro and in particular the yen, with the latter appreciating almost 3% against sterling.