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GBP/USD Falls to Fresh 10-Week Low on Hardening Brexit Talk

GBP/USD Falls to Fresh 10-Week Low on Hardening Brexit Talk

Nick Cawley, Strategist

Talking Points

- The British Pound sank as traders see UK PM May’s comments leading to a ‘hard’ Brexit.

- UK house prices shrug off gloom and rise in December according to the latest Halifax survey.

- See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for the week on the DailyFX Webinar Calendar.

Comments from UK Prime Minister Theresa May over the weekend sent the British Pound sharply lower in early trade Monday, with GBPUSD hitting a fresh 10-week low. Speaking on Sky television, PM May said that her government was not suffering from “muddled thinking” on Brexit, and that the UK would not try and keep “bits of membership.” May highlighted that control of immigration was uppermost for her government, pointing towards a ‘hard’ Brexit.

"We are leaving, we are coming out, we are not going to be a member of the EU any longer.We will have control of our borders, control of our laws, but we still want the best possible deal for UK companies to trade with аnd operate within the European Union and also European companies to trade with and operate within the UK.”

The British Pound, under pressure from May’s weekend comments, had a brief respite on the latest UK housing outlook, before selling continued. The latest data from UK lender Halifax show that house prices increased by 1.7% between November and December,the fourth successive monthly rise and the biggest since March 2016 (2.2%). The annual rate of growth also increased, rising for the second consecutive month, to 6.5% from 6.0% in November.

In other Brexit-related news, three high-profile City figures will appear before the Treasury Select Committee Tuesday to answer claims that they exaggerated the negative effects of the UK leaving the EU. Douglas Flint, chairman of HSBC, London Stock Exchange boss Xavier Rolet, and Elizabeth Corley, vice chairman, asset manager Allianz Global Investors, will appear before the panels of MPs, according to an article in The Daily Telegraph newspaper.

Chart: GBPUSD 5-Minute Timeframe (January 09 2017)

--- Written by Nick Cawley, Analyst

To contact Nick, email him at nicholas.cawley@ig.com

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