Sterling falls as May makes Brexit speech

Investors disappointed as prime minister fails to outline specifics on Brexit divorce bill in much-awaited speech

Sterling dropped after Britain’s Prime Minister Theresa May’s speech in Florence, Italy. Photograph: Jeff J Mitchell/Reuters

Sterling dropped after Britain’s Prime Minister Theresa May’s speech in Florence, Italy. Photograph: Jeff J Mitchell/Reuters

 

The pound fell on Friday as investors were disappointed by UK Prime Minister Theresa May’s much-awaited speech in Florence.

Sterling declined against all of its Group-of-10 peers as Ms May said she would seek a transition period of around two years after Brexit, but failed to outline specifics on a divorce bill that has been a sticking point in talks with the European Union. UK bonds traded steady after rallying earlier.

The speech had been awaited as a barometer of the UK premier’s approach to Brexit, following recent news reports suggesting divisions within her own party and a lack of progress in the official discussions with the EU.

May promised the UK would honor its financial commitments during the period and rights for European Union citizens following Brexit. The pound fall’s is a “knee-jerk reaction to the fact that there is no mention of an exact figure on the EU divorce bill, though that commitment is as good as any so far,” said Viraj Patel, a currency strategist at ING Groep NV in London.

“It should be positive for sterling once the initial noise fades.” The pound fell 0.4 per cent to $1.3530 (€1.1305) as of 4.00pm in London after sliding as much as 0.7 per cent earlier. The yield on 10-year gilts was little changed at 1.36 per cent.

The next round of negotiations between Britain and the EU will begin on Monday, after being delayed to accommodate May’s speech.

- Bloomberg