Trading on sterling has been volatile ahead of a key speech on Brexit by prime minister Theresa May. Here’s our at-a-glance guide to what to watch for in this major market-moving event and how to trade it.

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Hard or soft?

Mrs May claims not to acknowledge the terms but markets certainly do want to know whether Britain’s divorce from the EU will be classed as hard or soft, which is really shorthand for either being in the single market or not.

A few red lines will be sketched and it’s expected that the PM will placate the Brexit wing of her party by prioritising controls of immigration and sacrificing the UK’s place in the single market, which would be in line with previous statements on the issue. Given that the government wants to be able to strike its own trade deals, it also means coming out of the customs union.

Extracts of the speech shown to the media earlier today show there will no half measures. Trade will be as free as possible but Britain cannot be "half in, half out".

Transition deal

The PM is unlikely to detail all her plans, but she might just be able to offer some clarity on the prospects of a transition deal to ease the pain of divorce.  If she were to strike a softer tone around this issue, for instance by maintaining freedom of movement until such transitional arrangements are phased out, then markets might breathe a sigh of relief.

Passporting

A key part of the UK economy, the financial services industry will be looking for any update on prized ‘passporting’ rights that allow them to sell across the EU from the UK. An exodus of City firms and banks is not what the government wants and there could be something that assuages concerns on this front, perhaps related to a transition deal. Instead of passporting financial services firms may have to rely on equivalence but this is less than ideal. A special deal for the City has been talked about but that seems unlikely.

Scotland & Northern Ireland

Brexit has the potential to radically redefine the relationship of the different parts of the UK. A forthcoming election in Northern Ireland might delay the triggering of Article 50. But the real risk is that a commitment to leave the single market could spark immediate demands from the Scottish government for another independence referendum. Such a move would mean unprecedented levels of political uncertainty for the UK. A breakup of the UK would be another massive blow for the pound.

Trump

Who needs the EU when Britain can strike a trade deal with the US? Trump has suggested the UK could be at the front of the queue for a deal. Senior British officials have already held talks with Trump’s transition team and we could get further details on what to expect. There are some significant hurdles before a US-UK trade deal is done, but we might get an indication of how quickly Britain can move.

When is Theresa May's speech? 

The PM is due to address attendees at 11:45 (GMT).

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