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Sterling slips on UK PM's Brexit speech
September 22, 2017 / 3:33 PM / 3 months ago

Sterling slips on UK PM's Brexit speech

LONDON, Sept 22 (Reuters) - Sterling slipped and Britain’s main FTSE 100 stock index climbed on Friday, as Prime Minister Theresa May gave a closely watched speech in Italy laying out her plans for Britain’s exit from the European Union.

The pound slipped to as low as $1.3488 during the speech, down from around $1.3550 before May began speaking. It recovered to around $1.3550 by 1430 GMT.

May said Britain would honour its budget commitments made during the period of its EU’s membership, and she proposed a two-year transition period.

She also said Britain could do better than membership of the European Economic Area or a Canada-style free trade agreement.

“Smoke and mirrors from PM May isn’t fooling the FX market: PM May is trying to change the perspective...(but) negotiations are ongoing and constructive rhetoric is unlikely to be a catalyst for further strong gains in sterling,” said ETF Securities analyst Martin Arnold.

Minutes before the speech, sterling had fallen around 30 ticks on a report in the Telegraph newspaper that May would raise the possibility of Britain leaving the EU before March 2019. May said in answer to a question that Britain would leave at the end of March 2019.

Britain’s FTSE 100 jumped 0.7 percent to the week’s high as the weaker pound boosted its mainly foreign-earning constituents. Mid-caps also gained 0.4 percent, and banks hit a session high, up 0.3 percent.

British government bond futures briefly rallied by around 15 ticks to a two-day high during the speech, before paring gains to trade at around the level they were before she started. (Reporting by Jemima Kelly, Ritvik Carvalho, Helen Reid and David Milliken, editing by Nigel Stephenson)

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