January 18, 2017 / 8:46 AM / 10 months ago

Daily Briefing: May on Brexit - clarity of sorts

LONDON (Reuters) - British PM Theresa May will take questions on her Brexit plan in parliament today.

Britain's Prime Minister Theresa May delivers her keynote "Brexit speech" in Lancaster House in London, 17 January 2017. REUTERS/Facuno Arrizabalaga/Pool

Most committed Brexiteers are relieved if not outright jubilant about her call for a clean break with the EU and its single market, but financial markets, businesses and her EU colleagues are still poring over the details with varying degrees of head-scratching.

There is still a lot of wiggle-room over the precise shape of Britain’s future ties with Europe and question marks over whether it is realistic to have an agreement about that deal by the end of the two-year process set out by the Article 50 trigger.

May’s insistence that she would prefer no deal to a bad deal with Europe also raised eyebrows given that the implications of “no deal” is a relationship based simply on WTO rules -- a long way from the best possible access she really wants. May argues that failing to clinch a deal would be an act of “calamitous self-harm” by the Europeans -- it’s far from clear they see it that way, however.

Angela Merkel and her cabinet have their first full discussion on Brexit later today.


The dollar is up against its currency basket but still close to four-week lows hit on Tuesday after adverse comments from Trump and a senior advisor on the strength of the dollar. Sterling’s big gains after PM May’s speech also contributed to the dollar’s fall and there is less pressure from that direction on Wednesday.

The pound is down 0.6 percent, as is the yen which hit a seven-week high against the dollar on Tuesday. The main set-piece on this saga will be a speech by Fed Chair Janet Yellen late in the U.S. day. Before that U.S. inflation data will be a focus.

Trump’s comments relieved pressure on some Asian currencies and helped lift stocks on the prospect of lower capital outflows from China and others. MSCI’s main Asia-Pacific index is up 0.4 percent and the weaker yen pushed Tokyo’s Nikkei average up 0.4 percent.

European stocks futures were slightly higher on Wednesday, pointing to a bounce back for European equities after a negative session on Tuesday which saw the FTSE 100 post its biggest daily loss since June 2016 as sterling rallied following PM May’s Brexit speech. UK company earnings are set to be in focus today after Pearson cut its profit outlook, though Burberry’s figures have beaten expectations.

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