Theresa May's speech has concluded, and while she did not confirm prior rumors that she may call for early EU departure prior to 2019, cable is lower on what has been called a "no news is bad news" speech, because as Danske Bank said, May's remarks in which she confirmed that the UK will be leaving the EU, highlight the Brexit remains a headwind for the pound.
Among the key highlights of her speech, May said that there should be a transition phase to allow businesses, people, and public services to “adjust to new arrangements in a smooth and orderly way."
The UK PM said that “access to one another’s markets should continue” on existing terms during transition and that the framework for this transition should be “the existing structure of EU rules” and regulations.
She also said that there will be a registration system for EU workers coming to U.K. during transition adding that the transition or “implementation” period will last “around two years” and should be agreed on “as early as possible.”
Finally, May calls for a clear “double lock” guaranteeing transition but also guaranteeing that period will be “time-limited” so public knows “that this will not go on forever”
Cable has slumped 80 pips, having started its decline ahead of the speech, and bottoming around 1.35
As Bloomberg adds, May's acknowledgment of the Brexit bill is perhaps helping the pound's resilience, yet the lack of details is proving problematic for investors. While May said "the U.K. will honor commitments we have made," Brits "want to continue working together," and "would want to make an ongoing contribution to cover our fair share," she sidestepped mentioning any amount and didn't really say how that amount would be determined. All she did say was that she "would not want our partners to fear they need to pay more or receive less over the remainder of the current budget plan."
Also, with cable slumping, both the FTSE100 and 10Y yields have rebounded on May's speech.