The British pound has been hammered in early Asian trade on Monday, dropping to its lowest level against the US dollar since the “flash crash” of early October last year.
Here’s the daily chart:
The move followed a series of newspaper reports over the weekend that suggested Theresa May will likely push for a “hard Brexit” in a highly anticipated speech to be delivered on Thursday.
“The market is now positioning for some fairly punchy rhetoric from Teresa May and this idea of ‘hard Brexit’ and a clean break from the single market seems increasingly likely, with the government making a bid to gain full control over immigration,” said Chris Weston, chief market strategist at IG Markets in Melbourne, in a note released on Monday.
Weston says that Brexit minister David Davis also added fuel to fire, calling for “priority around negotiating ‘third country’ free trade deals, which by all accounts are very hard to achieve unless there is full separation”.
As a result, the pound has tumbled against all of the major crosses, especially the US dollar and Japanese yen.
The GBP/USD currently sits at 1.1985 while the GBP/JPY buys 136.92. Both are down more than 1% from Friday’s closing level.