It would seem that Parliament remain confused as to what leaving the European Union should entail. The Referendum after all only asked a simple yes or no question. And today’s parliamentary discussion around the subject of Brexit has once again left everyone scratching their heads.
Theresa May has now opened the doorway of discussion on the subject to every member of parliament, with every political view and agenda.
It would seem that Government are not the only ones confused as to what Brexit means, Sterling has swung nearly 2 cents against the Euro in the last 24 hours and is probably set for further losses by the end of the week. So where is the bottom for Pound Sterling?
There doesn’t seem to be one, no amount of positive economic data is supporting the Pound for any reasonable amount of time. Negative data appears almost unresponsive to exchange rates which leaves only one factor driving Sterling exchange rates, politics.
We witnessed rates drop when Boris Johnson hinted at Article 50 deadlines and the same when Theresa May confirmed the rumours. We also witnessed rates drop when EU officials poured their petrol on the whole Brexit fire. GBP EUR exchange rates shot up over a cent this morning when Theresa May promised Parliamentary scrutiny on Brexit terms, before crashing once again this afternoon.
So what can we take away from this?
The EU will make it extremely difficult for the UK when it comes to the negotiation table, and have promised remaining members that the UK will get a worse deal. The UK voted to leave the EU which can only be interpreted one way, surely?
The UK will not get access to the single market without free movement, which Brexit supporters will not accept. And why would the UK become a member of the EEA? The EEA allows for access to the market without any say in how it operates going forward, and still has to allow for free movement.
So here we are, Sterling will continue downwards and Article 50 will be invoked which will cause further downfalls. Then the EU will reiterate that the UK cannot have access without free movement, check mate.
And how will Sterling look then? Article 50 has been enacted and the Government spend all of their time and effort trying to get access to the single market whilst blocking the rights of EU citizens from coming to the UK.
But what about all these trade deals that other countries have? Like the EU-Canada free trade agreement? That trade deal thats taken the best part of a decade to agree and which still hasn’t been finalised? The UK has 2 years to negotiate the best deal or it could find itself defaulting to WTO rules.
UBS have predicted 1:1 on the exchange next year, I envisage exchange rates will pass these predictions by the time Article 50 is invoked.