Friday 24 March 2017

Sterling slumps again after fresh Brexit fears

Theresa May
Theresa May
Colm Kelpie

Colm Kelpie

Sterling slid for a second day yesterday on the back of uncertainty over Brexit.

The pound hit a two-month low against both the dollar and euro as worries about the UK's plans for exiting the EU continued to weigh on the currency. Sterling has been under pressure since Theresa May claimed in a weekend interview that she was not interested in keeping "bits" of EU membership.

Reiterating that Britain would be able to control its borders and suggesting London would seek a bespoke trade deal with the EU after Brexit, Ms May repeatedly fudged the question of whether Britain would remain in the single market.

That has reignited fears in some quarters about the prospect of a so-called hard Brexit.

Ms May has said that it was wrong for investors to interpret her comments as pointing to a hard Brexit - in which border controls are prioritised over market access - when asked about sterling's falls on the back of her interview.

She added that she rejected the idea of a "hard" versus a "soft" Brexit, that the government was seeking "the best possible deal" in terms of access to the single market, and that she had said nothing new on Sunday.

John Moclair, head of global customer group at Bank of Ireland, said sterling had staged a modest and unexpected comeback towards the end of last year, strengthening by 9pc against the euro between mid-October and mid-December, on the back of positive economic data. "Whilst 2016 was clearly a tough year for the pound, it's evident that 2017 has the potential to be just as tumultuous.

"As such, the need for Irish businesses trading with the UK to have a clear approach to managing sterling risk remains extremely important," he said.

Irish Independent

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