Normal service has resumed for the pound on Wednesday.
Sterling took off on Tuesday, gaining more than 2.6% against the dollar after Prime Minister Theresa May’s speech confirming that the UK will be leaving the single market and opting for a “Hard Brexit.”
During the speech sterling was helped by May’s confirmation that both the House of Commons and the House of Lords will be given the opportunity to vote on Britain’s final Brexit deal, adding a moderating influence into the dealmaking process.
Sterling is struggling to hang on to the gains, however, and the pound is dropping once again against the dollar on Wednesday morning, resuming the pattern seen on the vast majority of trading days since the Brexit vote last June.
Around 9.10 a.m. GMT (4.10 a.m. ET) sterling is lower by roughly 0.8% to trade at $1.2313, as the chart below shows:
It should be noted that sterling still remains roughly 2 cents higher on the dollar than it was at the start of trading on Tuesday.
Kathleen Brooks, the research director at spread betting firm City Index writes in an email this morning:
“After taking the top spot in the G10 currency space on Tuesday, the pound is the worst performer so far today. After the rapturous reception to Theresa May’s speech, today sterling traders may be taking a finer look at the detail, and concerns may start to arise about Theresa May’s tough line on Europe, saying that she would prefer no deal, rather than a bad deal with the EU after Brexit. This is a key reminder that the pound’s sensitivity to politics is alive and well, and volatility is here to stay.”