Pound falls against dollar after May gives Brexit timetable
Pound falls against dollar: British Prime Minister Theresa May announced plans to trigger the Brexit process by March 2017. Global stock markets show an unstable pound sterling in the face of economic uncertainty.
Toby Melville /Reuters
In a Sunday speech to her Conservative Party's annual conference, British Prime Minister Theresa May announced that she will pull the trigger on Article 50 – the clause established in the 2007 Treaty of Lisbon, which allows countries to divorce from the European Union – by March of 2017, an announcement followed by a drop in the value of the pound sterling, as it fell to some of the lowest post-Brexit levels yet.
The pound fell to a 31-year low against the dollar in early trading in New York on Tuesday, trading below the levels it hit after Britain voted to leave the European Union in June, The Wall Street Journal reported.
The currency fell 0.82% to $1.274 reaching almost 15% below where it traded on June 23, the day the U.K. went to the polls. The pound was trading down against the euro at €1.141, down 0.4%.
"We will invoke Article 50 no later than the end of March next year," Ms. May told the conference in Birmingham, according to Reuters. "Parliament put the decision to leave or remain inside the EU in the hands of the people. And the people gave their answer with emphatic clarity."
May went on to further suggest that at present, full economic access to Europe – Britain's largest trading partner – was a lower priority than gaining sovereign control over the country's immigration.
"We will do what independent, sovereign countries do. We will decide for ourselves how we control immigration. And we will be free to pass our own laws," said May, according to The Telegraph.
Britain is "a country with the self-confidence and the freedom to look beyond the continent of Europe and to the economic and diplomatic opportunities of the wider world," she said, mentioning possibilities for free trade deals beyond the continent.
Following the Birmingham speech, however, the value of the pound plummeted to a three-year low against the euro, and its lowest value against the dollar since early July, shortly after the Brexit vote originally passed.
That initial decision led to immediate economic turmoil as the world financial markets recoiled following a newfound sense of uncertainty over future trade arrangements with Britain, which currently stands as the world's fifth-largest economy. The recent drop in the pound's value comes as major investment banks see May and her cabinet as beginning to steer the country toward a so-called hard Brexit, in which the country would sacrifice membership in the single market in order to retain more control over immigration. EU leaders have emphasized that upholding freedom of movement is key to maintaining access to the single market.
May rejects the notion that Britain must choose between a "hard" and "soft" Brexit, but others disagree. "Although May does not like the 'hard-soft' distinction, this looks pretty 'hard' to us," investment house JP Morgan wrote in a note to their clients, which Reuters obtained.
The JP Morgan comments follow a September round-table discussion in which executives from major United States banks threatened to relocate their European corporate offices to Continental Europe because of the increased uncertainty following the continued move to push the Brexit plan through.
"The message was clear from at least some of those present [at the meeting]: if Theresa May cannot provide some early clarity about where the negotiations will end up, the only way to avoid that uncertainty would be a move towards Europe – there will not be time to wait," a source told The Telegraph in late September.
In comments to the BBC on Monday, British finance minister Philip Hammond addressed the mounting concerns. "There will be a period of a couple of years or perhaps even longer when businesses are uncertain about the final state of our relationship with the European Union and during that period we need to support the economy," he said.
Though strength in the manufacturing industry helped buoy the nation's currency later on Monday, strategists largely foresee further volatility moving forward. Experts at Deutsche Bank have predicted that the sterling will end the year at $1.25, which would be a 31-year low, reports The Wall Street Journal.