What's going on?

The pound had it best one-day gain in eight years (versus the US dollar) as Britain�s Prime Minister (PM) laid out a broad new vision for the country�s post-Brexit relationship with the European Union (EU).

What does this mean?

On Tuesday, PM Theresa May sought to provide some clarity on the upcoming Brexit negotiations. She said that Britain would be willing to pull the UK out of the EU�s free trade zone (also called �the single market�) in order to regain control over immigration and other policies. However, she also emphasized that Britain would seek �the greatest possible to access� to free trade with the EU.

Why should I care?

For the markets: The pound�s big jump might just be a rebound from its weakness in recent days.

Today�s move in the pound�s value has to be put in context: on Monday, it sold off significantly as some of the details of May�s speech were leaked (especially the bits about leaving the single market). To some degree, today�s move was a rebound from that drastic drop. There was, however, some new information: May announced that the UK Parliament would get to vote on the final deal with the EU. Arguably, that means the deal is less likely to be an extreme departure from current expectations (otherwise Parliament might vote against the Brexit deal) � and, as such, businesses could be more comfortable investing in Britain (thus boosting demand for the pound).


The bigger picture: May�s aims appear to be much less �protectionist� than Trump�s.

May reiterated her commitment to keeping taxes on imports from Europe (a.k.a. tariffs) as low as possible � which is a big concern for British companies that rely on these imports (which many of them do). This is in contrast to President-elect Trump�s avowed position on trade, which involves raising taxes on imports. The British approach appears to be more supportive of free trade which, typically, economists say is better for economic growth.