Article 50 and the pound

Synopsis

Sterling today shows volatility as it starts off weak but fluctuates without significant movement. The market anticipates the European Union's response, particularly looking for draft negotiation guidelines from the Commission within the next 48 hours. The EU summit on April 29 marks a critical date, as negotiations will commence after the French elections. The UK aims to negotiate the terms of its exit concurrently with future arrangements, while the EU insists on determining exit terms first. The Tory party's internal dynamics are also under scrutiny, especially regarding the implications of the Prime Minister's conciliatory tone and the potential backlash from eurosceptic backbenchers. This internal conflict may lead to renewed uncertainty in the market, reminiscent of the turmoil following the Brexit vote in June, which severely impacted sterling, dropping it to around 125 to the dollar.