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Pound Slides After Theresa May's Speech Leaks: UK PM Lays Out "Clean EU Break" In 12-Point Plan

While hardly coming as much of a a surprise following the weekend's news that Theresa May would call for a "clean and hard Brexit", confirmation received moments ago from both the Telegraph, FT and Bloomberg that on Tuesday May will indeed declare that Britain is making a "clean break" from the EU and will not seek a deal that leaves the country “half in and half out”, has send the sterling lower by some 25 pips, because even though the news is not incremental, as Bloomberg notes quoting a trader, "Algos Trade Off Keyword Flagged in Speech."

According to The Telegraph, which has likely seen an advance copy of her speech tomorrow, the UK Prime Minister will set out a 12-point plan for Brexit as she vows that the UK will not have “partial” membership of the EU “that leaves us half-in, half-out”. Mrs May will make her most significant speech since becoming Prime Minister in July last year and confirm that Britain will leave the single market and customs union after Brexit.

Some more details of her upcoming speech, courtesy of the Telegraph:

  • In remarks that will delight Conservative Eurosceptics, May will pledge that Britain outside the European Union will be a “great, global trading nation” that is “respected around the world and strong, confident and united at home”.
  • The Prime Minister will make regaining control of Britain’s borders one of the central themes of her Brexit strategy and will also make clear that the rights of UK expats will be protected.
  • She will make clear for the first time that Britain will not seek a watered down version of Brexit, something that Remain campaigners are still pushing for.
  • The Prime Minister will say that Britain is quitting the single market and although she will be less explicit on the issue of the customs union, her remarks will make clear that after Brexit the UK will no longer be a member.
  • She will say that the Government has “12 objectives that amount to one big goal: a new, positive and constructive partnership between Britain and the European Union”.

The 12 objectives are understood to include gaining control of Britain’s borders, taking the UK out of the jurisdiction of the European courts, preserving the Union, maintaining workers’ rights and signing major free trade deals.

“And as we negotiate that partnership, we will be driven by some simple principles: we will provide as much certainty and clarity as we can at every stage,” Mrs May will add. “And we will take this opportunity to make Britain stronger, to make Britain fairer, and to build a more Global Britain too.”

Her remarks will be seen as a direct rebuke to European leaders who have repeatedly claimed that Britain will have to compromise on freedom of movement if it wants membership of the single market or customs union. “We seek a new and equal partnership – between an independent, self-governing, Global Britain and our friends and allies in the EU,” the Prime Minister will say in the speech in Lancaster House in London.

“Not partial membership of the European Union, associate membership of the European Union, or anything that leaves us half-in, half-out. We do not seek to adopt a model already enjoyed by other countries. We do not seek to hold on to bits of membership as we leave.

“The United Kingdom is leaving the European Union. My job is to get the right deal for Britain as we do.”

She will also use the speech to directly counter claims by her critics that she has no plan for Brexit.

Mrs May has pledged to trigger Article 50, which triggers formal Brexit negotiations with Brussels, by the end of March. The four principles guiding the negotiation with Brussels will be “certainty and clarity”, “a stronger Britain”, “a fairer Britain” and “a truly Global Britain”, Mrs May will say.

Ultimately, May will concede that the “road ahead will be uncertain at times”, but will make clear that Brexit will lead to a “brighter future” for voters’ children and grandchildren.

“A little over six months ago the British people voted for change,” Mrs May will say. “They voted to shape a brighter future for our country. They voted to leave the European Union and embrace the world.

 

“And they did so with their eyes open: accepting that the road ahead will be uncertain at times, but believing that it leads towards a brighter future for their children – and their grandchildren too.

 

“And it is the job of this Government to deliver it. That means more than negotiating our new relationship with the EU. It means taking the opportunity of this great moment of national change to step back and ask ourselves what kind of country we want to be.”

Mrs May's speech comes after Donald Trump, the President-Elect of the United States, said that Britain and America will get a new trade deal "done quickly and done properly".

* * *

The Telegraph adds that Eurosceptics and senior Leave campaigners will welcome Mrs May’s commitment that Britain will quit the single market.

On the customs union, Mrs May will suggest that there could be scope for negotiating access for some sectors – such as the automotive industry – after Brexit.

 

However, it will be clear from her words that while the Brexit negotiation may include discussions about some form of access, Britain is leaving the customs union.

While May will not set out her plans for Britain’s post-Brexit immigration system, she will favour a work permit system, meaning EU migrants will only be able to come to the UK to live or work if they have a firm job offer.

“My answer is clear,” Mrs May will add. “I want this United Kingdom to emerge from this period of change stronger, fairer, more united and more outward-looking than ever before. I want us to be secure, prosperous, tolerant country – a magnet for international talent and a home to the pioneers and innovators who will shape the world ahead.

“I want us to be a truly Global Britain – the best friend and neighbour to our European partners, but a country that reaches beyond the borders of Europe too. A country that gets out into the world to build relationships with old friends and new allies alike.”

* * *

The good news, if only for the market, is that with her speech fully leaked at this point, there will be no further surprise, and if anything, it is possible that the sterling's next move is higher, especally as an adverse Supreme Court ruling on Article 50, which could come at any point, could unleash a violent short squeeze in cable.