But strength was what they got, both from the Prime Minister and from sterling, which handed in its strongest gain against the dollar since October 2008.
While May’s tone was conciliatory on many issues, including the Irish land border, collaboration in the fields of science and technology and security, she did end the speech with a warning. She said, while the UK intends to remain a “good friend and neighbour” to Europe, a move on the EU’s part to look for a punitive deal would be “an act of calamitous self-harm”.
As the public opening gambit in what will be a lengthy period of negotiation it ticked a number of boxes. May was clear about the country’s intentions and there was some welcome clarity on the fact that the country is not going to seek access to the single market. This also represented a step forward (albeit a small one) in the government’s understanding of the European Union’s view of the inviolability of the so-called four freedoms.
But as Roger Hallam, currency chief investment officer within JP Morgan’s global fixed income, currency & commodities group pointed out, the full speech on Tuesday didn’t reveal an awful lot more than what was leaked and the course that has been plotted continues to represent a huge amount of challenges for the UK.
And, as a result, he said: “On a medium-term view, this has to heighten he risks to the UK’s balance of payments and there would need to be a sustained period of lower sterling for the UK to adjust. The structural headwinds for sterling remain in place”.
However, he added, in terms of the immediate impact, it is important to look at the move of the pound in relation to its moves in recent weeks, pointing out that the market had most likely moved a little too far over to one side.
