The pound is in for a “wild ride” as Theresa May prepares to outline her plans for Britain’s divorce from the European Union.
Sterling was trading up against the US dollar ahead of the speech at 1.21 US dollars, but experts put that down to weakness in the US currency rather than underlying positive sentiment among traders.
The pound was down slightly against the euro at 1.13 in morning trading.
Neil Wilson, senior market analyst at ETX Capital, said: “We’re expecting a wild ride for the pound today. These gains are largely down to dollar weakness, however, as the greenback has suffered a bit of a sell-off overnight and gold has risen amid a bid for safer assets ahead of this speech and Donald Trump’s inauguration on Friday.”
He added that another reason the pound is not in negative territory is because details of Mrs May’s speech that have been made public, such as plans to leave the single market and customs union, represent nothing new.
“Traders are waiting for more detail from the PM before making big decisions,” Mr Wilson said.
The Prime Minister is expected to say she does not want an outcome which leaves the UK “half-in, half-out” of the European Union.
Mrs May will say she wants a “truly global Britain” which will be “more outward-looking than ever before” and will remain “the best friend and neighbour” of the other 27 members of the EU.
But she will insist she is not “seeking to hold on to bits of membership” or to achieve a “partial” or “associate” membership of the EU.