Pound In Focus As Brexit Talks Begin

The day has finally arrived. The UK and the European Union leaderships are meeting to kick off a long negotiation process with the ultimate goal of making its divorce official once for all.

However, this process begins in times of strong political uncertainty in the UK following a disappointing parliamentary elections two weeks ago.

Prime Minister Theresa May’s Conservative Party had to come with an informal agreement as it struggled to obtain a majority in the House of Commons. A situation EU leaders could take advantage of as negotiation moves forward in the next few months.

Meanwhile, domestic issues in the UK continued to weigh on market sentiment, with a deadly fire on the Grenfell tower costing at least 58 lives and a new terror attack at Finsbury Park hitting the news earlier today. Recently, Manchester and London were affected by other tragedies.

There’s no need to say that market players are not fans of uncertainty and fear has visible immediate consequences on investments. Apart from the FTSE 100, the British pound is currently one of the most interesting currencies to look at.

Pound

The pound was trading at 1.2804 against the dollar, adding 0.19 as of 09:00 GMT. Compared to the euro, sterling was exchanging at a 1.1435 rate, 0.18 percent higher.

Equities

Taking a look at stock indexes this morning, the FTSE 100 futures were 0.25 percent higher as of 08:50 GMT, slightly above the 7,451 mark. The FTSE 250 was 0.13 percent positive at 19,844 points. The weakening pound supports equity markets.

Trading activity is obviously restrained ahead of the first day of talks and range trading is likely to continue for the rest of the day/week.

Key Dates in June:

• June 19 - Brexit negotiations begin in Brussels
• June 21 - Theresa May’s administration lays out legislative process in the Queen’s Speech
• June 22/23 - European Union leaders meet in Brussels