STERLING dropped below $1.20 yesterday – hitting its worst levels since October’s “flash crash” – amid growing fears the UK Government proposes to lead the country towards a “hard Brexit”.
The pound came under heavy selling pressure yet again amid reports that Prime Minister Theresa May will, in a speech today, emphasise control over immigration as a priority. There have been mounting signs from the Conservative Government that the immigration issue will be prioritised over free access to the single market.
Fears of hard Brexit were also fuelled by a German newspaper interview with Chancellor Philip Hammond, published at the weekend, in which he signalled a hard line on Brexit negotiations.
Sterling fell as low as $1.1979 during trading in Asia yesterday. It was, by 5pm in London, at $1.2044, down by 1.55 cents on its pre-weekend close of $1.2199.
The pound traded close to $1.50 on June 23, ahead of the result of the European Union membership referendum.
Sterling also dropped against the euro. The single currency was, at 5pm, trading around 87.95p, up by 0.89p on its pre-weekend close.
Chris Saint, senior analyst at Hargreaves Lansdown Currency Service, said: “Fears Theresa May will use [her] speech to signal that the UK will take the ‘hard Brexit’ route and pull out of the EU single market have hit the pound hard today.
“Previous comments from Mrs May on her Brexit plans have tended to be negative for sterling, and traders will be positioning themselves for potentially more of the same.”
Appealing for a negotiated EU exit settlement, Carolyn Fairbairn, director general of the Confederation of British Industry, told The Guardian“the practicalities of a disorderly crash-landing need to be understood”. She said: “An exit into WTO [World Trade Organisation trade terms] at the stroke of midnight without the proper planning and preparation in place would be very serious for the UK economy.”
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