The pound has been volatile thanks to May’s Brexit speech. What’s next for sterling? Here is the view from Goldman Sachs:

Here is their view, courtesy of eFXnews:

Prime Minister May’s speech painted a rosy future for the UK outside the European Union and at the center of the global economy, but the near-term implications of the statement look to us entirely different and more harmful than the interpretation embraced by markets.

The speech left no doubt that the UK is prepared to move towards “hard Brexit”: whether the European Union will be willing to negotiate free-tariffs agreements while the UK restrains immigration from EU countries and removes itself from the European Court of Justice’s jurisdiction remains highly unlikely, in our view. The UK’s position on its contribution to the EU budget and the threat of significant tax reductions also have the potential to toughen the EU’s negotiating stance. The European Market, due to its size, is more important for UK trade than the UK is from the European Union and, in our view, PM May’s ‘red lines’ remain incompatible with deals that de facto would grant the UK free access to the Single Market. At best, experience teaches us that it takes an extraordinarily long time for trade agreements to be negotiated and voted by the EU Member States. At worst, the fact that Ms. May stated she would not look for an “unlimited transitional status” and that “no deal is better than a bad deal” puts on the table the possibility that EU-UK trade relationships will be governed by WTO rules in approximately two years’ time. There will also be a high degree of uncertainty over the legal framework governing the trade in services for a long time.