On Tuesday, UK Prime Minister Theresa May will address an audience of EU ambassadors at Lancaster House in London in what her office has described as an important Brexit speech. What exactly she will be discussing is as yet unknown. Most commentators, however, believe that this will be the first complete confirmation of the PM’s possible strategy for the divorce proceedings with the EU, one which will pander towards a so-called ‘Hard Brexit’ – a complete split from the Union and its single market.

While CNBC has suggested that the speech will begin at 11:45am, the PM’s office has not released the time of the event, nor will it. Could this move be to limit the impact of speculation on GBP pairings, especially for the embattled cable market which has already been on the receiving end of a Brexit-inspired sell-off to 3-month lows? Or might it instead be because the details of what she will be saying are yet to be finalised?

Either way, it is presumable that the PM will give away too few details rather than too many; Mrs May has previously stated her opposition to a ‘running commentary’ on Brexit in the commons.

While we may have confirmation of the Sunday Time’s story that the PM would be willing to leave the single market in order for her preferred objectives of maintaining full control over the UK’s borders whilst leaving the jurisdiction of the European Court of Justice, not much else is likely to be revealed.

This may be the case, given that UK Chancellor Philip Hammond claimed that the Treasury might be willing to low ball the EU’s corporate tax rate in order to attract the biggest and best in the world to Britain and avoid an exodus of multinational corporations leaving to set up shop in the Mainland Europe. Previously unwilling to provide definitive ideas of what his economic department would be willing to do in the case of a Hard Brexit, this is a strikingly obvious move towards abating fears in the financial sector of such a move.

Could the PM spring a surprise and instead show a preference for keeping single market access?

Although the PM’s spokeswoman on Monday branded talk of the government pursuing a Hard Brexit as ‘speculation’, this seems unlikely; just last Sunday during an interview with Sky News, the PM appeared to allude to favouring a full split from the EU as opposed to picking and choosing policies to fight for.

Whilst a best case Brexit scenario would allow the UK full autonomous border and legislative control while maintaining its position in the single market, this would be near impossible with European powers perceiving this as a loss of face. As a result, tomorrow will finally give markets the opportunity to see into the mind of Theresa May as the UK steps into the unknown.

In the mean time, traders will be keeping a keen eye on FX markets for any further weakness in Sterling, with the UK’s currency already under fire as a result of Sunday’s press speculation in anticipation of Tuesday’s speech.

Having previously refused to show the UK government’s Brexit hand, tomorrow the first card may just be revealed.

Henry Croft, Research Analyst, 16 January