Open trading account
Prime Minister Theresa May delivered a landmark speech on Brexit. Much of the speech had been leaked to the British press ahead of time, but the pound had a historic day nonetheless — surging 2.9% (1,2430), its largest 1-day gain since 2008. In her remarks, May confirmed that Britain would no longer enjoy access to Europe’s common market, but would assume full control over its borders and immigration policy. She said that Britain was not looking for a “half-in, half out” relationship with the EU, and Britain would seek free-trade deals with Europe and countries around the world. May intends to begin Brexit negotiations with Europe in March and has set a two-year time frame for an agreement to be reached. The pound soared more than 1,24 after the speech, mainly on May’s reassurance that any agreement would have to be ratified by both houses of parliament. The pound was also buoyed by strong UK inflation data. CPI, the primary gauge of consumer inflation, climbed 1.6%, its highest level since July 2014. On Monday, BoE Governor Mark Carney said that higher inflation the country is experiencing will take a toll on wages and consumer spending. Carney didn’t shed any light on future monetary policy, saying that interest rates could move in either direction in the months ahead. Still, the BoE will want to keep a lid on inflation and could raise rates in order to do so. The bank has projected an inflation rate of 2.7% in 2017, but some experts are forecasting inflation levels closer to 4 percent. Allthough British employment numbers were strong too (– released 18.01.), as wage growth and unemployment claims were better than expected, GBP didnt keep the bullish direction.
