Looking through the bluster of May's speech here's 5 key elements to it and what they mean going forward
Out is out. Further confirmation that we're not going cherry picking. We're coming out of the customs union, we're coming out of the single market, and with bullish talk about how we'll get back in. Bullish talk might be cheap but that's what the market wants, strong talk, not wishy washy rubbish.
The ball is partly in Europe's court. No cherry picking means new deals are needed. The pressure is now on Europe to negotiate properly. There's 27 countries that we do business with, and who do business with us. May is going to offer an open door, what are you going to do Europe?
MP opponents of Brexit are hung out to dry. You've got your vote, are you going to go against the will of the people and not vote through the deals? What are you going to do now Scotland? Scotland has already responded and we'll have to see how much is ground is actually going to be given by this final vote.
Damage limitation? The offer of a parliamentary vote might have been given to nullify the result of the Supreme Court decision due, which many already expect will go against May. It doesn't really matter now. However, the vote has been offered on the final deal, not triggering art50 so there's still that hurdle. May's offered a sweetener here.
May's shown some of her poker hand. She's far from getting a royal flush but she's got two pair with the river to come (no, not a dunking in the Thames). That's a pretty strong hand to play against parliament and Europe. She's put forward an idea (I won't say it's a plan) to get the best deal possible, in our relationship with Europe and elsewhere. She wants EU citizens in the UK to remain, and will expect the same consideration from Europe. Nearly everything about the speech is putting the onus on parliament and Europe. That's a smart move. We just need to see Europe's hand now.
For the pound, the market wants one thing above all, and that's a clear, near-term plan. This isn't the negotiation so that's another battle to come. The immediate path is clear, that the UK is coming out, and now there's no confusion about hard or soft Brexit. It's exit pure and simple, and the devil will be in the detail later. That's why the pound is higher, even though previously a hard exit was viewed as negative. In this speech, May has shown she's in control. How long that lasts is anyone's guess, and it won't be long before the UK press and MP's start making themselves heard (see Sturgeon). One big test of this speech will come tomorrow during Prime Ministers Question time. That could be a hot show to click into from 12.00GMT.
It may be a passing comment but the comment from Tusk is potentially a chink of light showing that outside of all the grandstanding on both sides, there could be a strong willingness to get a good deal done for both sides. Just as some individual countries see that there's a lot to gain, Europe and the UK as a whole, have far more to lose.
At the very least, this should give May some breathing room into March but we'll still have the court case to deal with. The quid is still liking it and as we know, when the pound gets a mooch on there's no telling where it will end up. Just taking a quick gander at the charts, 1.2400/30 is the area to watch now, followed by 1.2500/15/20.
GBPUSD Daily chart
I very much doubt this is the start of a massive move higher but what today might have done, is put a temporary floor in under the pound.
