- Theresa May echoes previous statement from Boris Johnson regarding timing of Article 50
- UK to begin withdrawing from the EU by March 2017
- UK likely to adopt ‘Hard Brexit’
- Sterling reacts to the news – 1.14646 at time of writing
UK to divorce from the EU before March 2017
Following Boris Johnson’s comments last week regarding the timing of Article 50, Theresa May has officially announced this weekend the deadline for withdrawing from the EU as March next year. Sterling has fallen over 1 cent against the Euro since yesterday with further losses likely as markets now wait for further updates or clarification as to what Brexit entails.
The process will officially start the 2-year negotiations between the UK and EU.
Has Theresa May hinted at a hard Brexit?
Theresa May stated “We have voted to leave the European Union and become a fully independent, sovereign country. We will do what independent, sovereign countries do – decide for ourselves how we control immigration.”. Many have interpreted this as a complete withdrawal from the single market, with border controls the prominent factor in negotiations.
Many EU officials have already warned that the UK cannot have access to the single market without open border policies, with this in mind the UK is likely not to adopt any lesser form of membership with the EU.
The implications for Sterling
Sterling is likely to fall further against the Euro in the short term as investors move assets to safer currencies. The UK has a number of challenges ahead, including how it plans to maintain passporting for the finance sectors as well as building trade agreements with countries to fill the gaps left from EU trade. GBPEUR exchange rates could fall to 1.10 in the weeks ahead with little safety from economic data. Those looking to buy Euros should consider the level of uncertainty ahead for the UK.