A lot happened over the past few weeks, with regard to Brexit. Here are the key highlights,

• British Prime Minister Theresa May, on Tuesday, outlined her government’s Brexit vision. According to her, Britain will leave the European Union but will maintain a friendly government with high levels of cooperation like in the case of security. Britain might remain a part of the Customs Union but with non-specific tariffs. UK would control immigration laws and would contribute to the EU budget.
• Before his formal inauguration, which is today, US President-elect Donald Trump welcomed the Brexit and forecasted Britain will not be the last one leaving and slammed Germany by calling the EU, a vehicle for the Germany. Germany responded with criticism.
• EU President Donald Tusk welcomed Theresa May’s speech but posed doubts on the agreement with regard to the customs union.
• German finance minister Wolfgang Schäuble said that the EU will not look to ways to punish the United Kingdom but warned that the deal is not going to be as good as a membership.
• German chancellor Merkel vowed to maintain the unity among the members of the European Union.
• UK’s chancellor of exchequer Phillip Hammond warned that if the UK is denied access to the single market, the Kingdom would revise its taxes lower to fight back.
• Chair of the Euro group finance minister Jeroen Dijsselbloem said that turning the UK to tax haven to fight EU would be unproductive and damaging.

We expect, with the UK set to trigger Article 50 in March, the noises around the talks and proposals in the media are likely to rise, leading to higher volatility in the pound based pairs.