The pound has begun the week on the back foot, with the currency lower across the board following comments from Theresa May which suggest that the Prime Minister will set Britain on course for a “hard Brexit”. Several newspapers over the weekend reported that Mrs. May will state during her speech at Lancaster House tomorrow that the UK is prepared to leave the single market, customs union and European Court of Justice with her priority in negotiations being to control immigration.
Hammond supports hard line approach
Despite Downing Street describing the latest reports as speculation there is a growing sense that the UK will look to take a hard-line approach to negotiations with the EU. Chancellor Philip Hammond has warned that the UK could slash business taxes if it is denied access to European market after Brexit, with the aggressive stance that is being adopted causing concerns in the financial markets. It is now nearly 7 months since the historical referendum took place and the economy has carried on more or less unperturbed as many business leaders have adopted a wait-and-see approach, rather than attempt to pre-empt what the future may bring. However this growing sense of preferential economic terms taking a backseat at the negotiating table is a worrying development and suggests that there could be more adverse effects to business than is strictly necessary. Having said that, news that US President elect Donald Trump will offer Britain a “quick and “fair” trade deal when he takes his place in the Oval Office later this week in a development that would be warmly welcomed in London and could substantially strengthen the UK’s hand in negotiating with the EU.
Quiet start for the stock market
The FTSE 100 is trading marginally higher by 6 points this morning with the blue-chip index beginning the week in a quiet manner. The best performing stocks come from the mining sector with Anglo American up by over 2% already. Fresnillo and Randgold Resources are also both gaining as they seek to continue their strong start to 2017. Housebuilders and banks are keeping any gains for the broader index in check with RBS falling by almost 3% and currently languishing at the bottom of the benchmark. Barratt Developments and Taylor WImpey are also lower by 2.1% and 1.9% respectively with some weakness evident in the housebuilding firms after a decent rally seen so far this month.
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