Pound down to daily low against dollar and euro amid Theresa May's Brexit speech
The pound fell to a daily low against both the US dollar and euro as investors reacted to Prime Minister's Theresa May's Brexit speech in Florence on Friday.
Sterling was down 0.6% versus the US dollar at 1.350, having only been 0.2% lower at the start of the UK Prime Minister's address.
Versus the euro, the pound extended its losses to trade 0.8% lower at 1.127.
It takes the UK currency further away from the near 15-month highs it reached just last week amid signs the Bank of England is likely to raise interest rates later this autumn.
Hamish Muress, a currency analyst at international payments firm OFX, said that while Mrs May tried to outline an "optimistic and upbeat relationship" with the EU, her speech did little to satisfy investors.
"The pound was sold off as traders looked for hints around future access to the single market, and were disappointed not to find them in the prime minister's speech.
"Not even the pledge for a two-year transition period could stem the pound's losses, particularly against the euro."
Mr Muress said investors will now patiently wait to hear what Mrs May delivers at the Tory conference in Manchester in October.
"The prime minister is likely to double down on this rhetoric when she takes the stand at the Conservative party conference next month, and traders will be watching developments closely.
"The markets want a firm commitment to a soft Brexit and future access to the single market, but it doesn't look like Theresa May will be pushing for this - at least for the time being," he said.
Adam Marshall, director general of the British Chambers of Commerce, said business leaders would judge Mrs May's speech based on whether it helped "break the stalemate" between the UK and EU that has left companies "counting the cost of uncertainty".
"The Prime Minister's constructive tone and clearer offers, particularly on guarantees on EU citizens' rights and UK contributions to the EU budget, represent an important and welcome effort to break the impasse of recent months, which has preoccupied many in the world of business," he said.
But Mr Marshall said "a significant majority" of businesses wanted a transitional period that lasted longer than the two years the Prime Minster proposed in her speech in Florence.
"We will challenge both the UK government and the European Commission over the coming months to agree a transition that lasts at least three years from the date of our formal exit from the EU, giving businesses enough time to prepare for a final deal," he said.
Lobby group TheCityUK said it is now up to the EU to act.
"Since the start of the Brexit negotiations, we have been clear on the benefits of mutual regulatory recognition. It's very positive to see that the British Government supports this principle - one which is in the best interests of all parties," TheCityUK chief executive Miles Celic said.
"The ball is now firmly in the EU's court and the clock is ticking. Any further delay in progressing negotiations risks additional and unnecessary economic disruption for customers across Europe."
