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Sterling Slips after May in Florence

Market Analysis

EURGBP, H1   

Sterling has shed about 0.5% as PM May speaks in Florence, where she has rejected the Norwegian and Canadian models as being unsatisfactory for the UK, admitting that she is not pretending that you can have all the advantages of the single market with none of the disadvantages. Cable dove to a low of 1.3487 from levels near 1.3480, subsequently clawing back to around 1.3510. EURGBP bolted higher, to 0.8869 from 0.8815. May’s remarks affirm that the government is aiming for a hard Brexit, though she also announced that she wants a two-year “implementation period,” and that it would be helpful to agree of this “as early as possible.” There are apparently no other heads of state in her audience, which is mostly comprised of Italian businessmen and diplomats, along with journalists, though May is using the speech as a platform to signal renewed vigor ahead of the fourth round of negotiations, which start on Monday. She has been dishing out plenty of Brexit platitudes, such “we are leaving the EU, but not leaving Europe,” and “we want the EU to be our strongest friend and partner.” key words – “Smooth and Certainty”. Reaction awaited from the EU.

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Stuart Cowell

Senior Market Analyst

HotForex

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