Falling 1.3% against the dollar, taking cable to the worst levels since October’s flash crash and in danger of dipping under $1.20, and 0.9% against the euro, the pound has been hit by the news that Theresa May and her seemingly inept army of Brexiteers are going to accept a ‘hard Brexit’ if it means ending freedom of movement. May is set to give a ‘Brexit’ speech on Tuesday, though the pound hasn’t wasted any time in reacting to the early reports. And while there is every chance it could see some kind of recovery tomorrow if a firm strategy is finally laid out, the size of this morning’s decline suggests that may not matter as much anymore.
Given the empty economic calendar, inspired by an absent US market thanks to Martin Luther King Day, this latest pound-drama is set to define Monday’s trading, something that could be good news for the FTSE. The UK index rose around 15 to 20 points after the bell, leaving it a tad higher than last Friday’s all-time high-hitting close, the latest in the FTSE’s ever so incremental record peaks.
The Eurozone indices, on the other hand, are suffering in light of the euro’s strength against the pound. The DAX and CAC fell 0.5% and 0.3% respectively, with little to chance the tone of trading as the day goes on.