The Daily Update - Brexit negotiations

Over the weekend the UK’s Prime Minister denied that both she and the UK government were guilty of ‘muddled thinking’ over Brexit negotiations, along with hinting that that she was prepared for the UK to leave the single market, thus initiating a hard Brexit. In an interview with Sky news she claimed ‘Our thinking on this isn't muddled at all, yes, we have been taking time’ adding ‘I said we wouldn't trigger Article 50 immediately, some said we should. I'm ambitious for what we can get for the UK in terms of our relationship with the European Union because I also think that's going to be good for the European Union’.

As is well known, the main sticking point in the Brexit negotiations look to be the link between the single market and immigration, and although May does not see it as a ‘binary issue’, that is not the view taken in the EU. To add to the Prime Minister's worries is the fact that prominent Tory back benchers are pushing the government to leave the single market and approach the negotiations with the view to a ‘full Brexit’.

Leading Eurosceptic Michael Gove has written for the BrexitCentral website, stating that May needs to deliver ‘a full Brexit, not settle for fake Brexit’. He went on to say “Once Article 50 is triggered, we should be very clear about our simple, straightforward, generous approach to leaving. We don’t want or need to be in the single market – outside we can control our own borders, laws and taxes. Inside we’re trapped’ adding ‘We don’t want to be bound by being members of the customs union. Outside we can negotiate new trade deals with emerging economies, and we don’t need to waste months talking about new tariffs. We don’t have any at the moment with Europe, we don’t want to impose any and attempts to over-complicate the issue are a trap.’

One person who does not think the UK should push for a hard Brexit is SNP leader Nicola Sturgeon, who has previously offered that she would not push for a second Scottish independence vote in the foreseeable future if a soft Brexit deal was hammered out. However, after the latest round of interviews she has warned that she is ‘not bluffing’ on the promise of a second referendum if Scotland were to be ‘driven off a hard Brexit cliff’.

On the back of the weekend’s events sterling has come under pressure on the FX markets, falling to its lowest level in 10 weeks, hitting 1.2125 against the US dollar in early London trading this morning. With currency traders also increasingly taking the view that the UK will end up with a hard Brexit, it looks like there will be no respite for the pound in the foreseeable future.