Ivan Rogers – Senior representative of the United Kingdom to the European Union, has resigned ahead of the deadline for Article 50, accusing the Government of ‘muddled thinking’ over their Brexit stance.
Rogers had a huge backing from EU officials, including Guy Verhofstadt, who took to twitter to praise Rogers for ‘knowing what he was talking about’. The news has hit headlines and has been labelled a huge blow to the Brexit position.
Pound to Euro exchange rates have reacted little to the news, but with the deadline for Article 50 fast approaching, an urgent replacement for Rogers is required.
It’s not known who will take his position at this stage.
Supreme Court Hearing: Pound Sterling hangs in the balance
The outcome of the Supreme Court hearing is due shortly and could play a huge part in how Brexit strategies play out. Markets remove concerned that if Government are allowed to invoke Article 50 alone, a hard Brexit would follow resulting in extreme levels of uncertainty for the UK and its huge financial sector.
The outcome is expected in January and its unlikely that Theresa May will win the right to Trigger Article 50 alone. That being said investors may be spooked and move funds out of the Pound and into the likes of the safe haven US Dollar.
Regardless of the outcome this month, Parliament have made it clear that they do not plan to prevent Theresa May from beginning the process of an EU exist by March, which could start a new wave of Pound Sterling losses in Q1.
Will Theresa May reveal her Brexit hand?
May has made it clear that she will not give a running commentary on Brexit negotiations, which further leaves the Pound’s direction in jeopardy. With a clear two year window for negotiations to finish, investors will remain wary of potential outcomes and may pull away from Sterling.
But the key factor hinges on whether the UK will opt for a soft or hard Brexit, one leaves the UK with access to its core markets whilst the other potentially, leaves the UK defaulting to WTO tariffs and raises concerns over the future of its Financial sector.
David Davis – Secretary of State for leaving the EU has promised that Government will outline Brexit plans by February, leaving Parliament little time to scrutinise the strategy before the invocation of Article 50.
It’s likely that Sterling exchange rates will hit a major period of volatility in the short term, with the direction likely to be determined by the type of Brexit the UK follows.