The pound jumped sharply on Tuesday, after Prime Minister Theresa May in an eagerly anticipated speech, said that she wanted the UK to emerge from Brexit negotiations “more united” and “outward looking” than before.

Ms May, in a speech at Lancaster House, emphasised Britain’s aim to build relationships outside of the European Union while remaining a “best friend”, to the bloc sending the pound rallying against the dollar.

The pound spiked to a high of more than $1.23, up by more than 2 per cent on the day. 

The rise is sterling’s biggest increase against the dollar since June 20 last year, ahead of the referendum.

Against the euro it was up 0.7 per cent at €1.1445.

“We are leaving the EU but we are not leaving Europe,” Ms May said.

Ms May also said she recognises how important it is to provide business and the public sector with “as much certainty as possible”. 

Confirmation by the Prime Minister that Britain will not continue membership of the single market has momentarily took some shine off the pound, but the prospect of not making regular contributions to the EU budget and plans for a new customs union helped the currency to hold on to its gains.

The pound extended its gains further after Ms May said the government will put the final Brexit deal to a vote in both houses of parliament.

Rabobank currency strategist Jane Foley said that much of the pound’s initial rally came after Ms May promised to put any final plan to a vote, but also cautioned that this provides “another element of confusion” around what would happen if the deal is not passed by parliament. 

Ms Foley further said that although Ms May voiced her ambition for a free trade deal with Europe but that “the signals from the EU suggest that this is not on the cards.”

“So there is likely to be a lot of volatility caused by this debate in the next couple of years,” she said.  

Source: The Independent