LONDON — The pound is falling against most major currencies on Monday morning after Theresa May signalled in an interview that the UK is likely to quit the Single Market when Brexit occurs.
Sterling is down 0.77% against the dollar at just after 8.00 a.m. GMT (3.00 a.m. ET) and down 0.83% against the euro at the same time. The pound is now at its lowest point against the dollar since late October.
The slide has been sparked by an interview Theresa May gave on Sky News on Sunday. The Prime Minister signalled yet again during the interview that she is aiming for a “Hard Brexit” — Britain leaving the European Single Market in order to regain immigration and boarder control.
Deutsche Bank’s Jim Reid says in his daily morning email on Monday: “Sterling has weakened following a Sky News interview yesterday with UK PM Theresa May in which she said the eventual exit of the UK from the EU will be about ‘getting the right relationship’ and ‘not about keeping bits of membership.'”
Michael van Dulken, head of research at Accendo Markets, says in an email on Monday morning that the dollar’s strength is partly to blame for the fall in the pound but adds: “UK PM May’s Hard Brexit rhetoric (ditch single market) in a Sky interview also gave Sterling a kick.”
Traders see a “hard Brexit” as bad for UK PLC as it would likely mean higher trade tariffs and would prevent service industries such as finance from selling to the European market unless a transition deal is arranged while a trade agreement is put in place. Even if tariffs do not rise and a transition deal is reached, many fear that the lingering uncertainty around Brexit will reduce trade until a final deal is worked out, which could take years.