The British pound pulled back on Wednesday mid-day trading session and currently traded at $1.22. The currency lost 0.72% it gained the previous day, as investors and analysts weigh on the current situation of the country after UK Prime Minister Theresa May outlined the country’s Brexit plans and the release of UK’s jobs data.
On Tuesday, as investors anticipated May’s Brexit speech, the sterling spiked by 3.2% and closed at $1.2409 against the US dollar, gaining its biggest one-day percentage increase since January 2009. However, pound lost its strength on the following trading day and traded at $1.22 after the UK jobless claims fell for the month of December while wages rose.
The Office for National Statistics released data showing that the unemployment rate in the UK remained unchanged at an 11-year low of 4.8%, which was in line with forecasts, while the average earnings index rose 2.8%, 0.2% higher than the forecast. Wages also increased by 2.7%, surpassing forecast of 2.6%.
The previous gain of sterling was greatly affected with the anticipation of the UK government’s stance and plans as it prepares for its departure from the European Union.
May stated, “We seek a new and equal partnership – between an independent, self-governing, Global Britain and our friends and allies in the EU… We do not seek to hold on to bits of membership as we leave. No, the United Kingdom is leaving the European Union. And my job is to get the right deal for Britain as we do.”
May stated during her speech that Britain is headed to a hard Brexit, expressing that she wants to leave the European single market completely but in talks for a free trade negotiation with the EU to maintain friendly relations even after the departure.
“We will continue to be reliable partners, willing allies and close friends. We want to buy your goods and services, sell you ours, trade with you freely as possible, and work with one another to make sure we are all safer, more secure and more prosperous through continued friendship,” May stated on her speech.
With May’s speech, the British pound has surged in the forex market from Monday’s $1.1986 rate and climbing to almost $1.2400 after the Prime Minster cleared the British government’s stand regarding the matter.
However, sterling was still 17% weaker ever since the first announcement of the Brexit last June 2016. Brexit has since affected many sectors in Britain, some of which was a higher cost on imported goods.
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