Pound falls ahead of May’s Brexit speech

Pound falls ahead of May’s Brexit speech

The pound has fallen below the $1.20 mark for the first time since October’s “flash crash”.

The reduced value of Sterling came ahead of a speech on Tuesday (16 January) when prime minister Theresa May is expected to signal that Britain will fully break out of the European Union’s common market after Brexit. 

The UK currency fell as much as 1.6 per cent to a low of $1.1986 against the dollar in early Asian trading in an unusually wide gap from Friday’s (13 January) New York close at $1.2175. 

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Traders in New Zealand — the first centre to open after the weekend — said sterling first traded in Wellington at $1.2085, representing a fall of almost a cent from its close on Friday (13 January). 

While it steadied to about $1.2020 as Asia’s bigger FX trading centres came online, the pound came under early pressure again in London, although it held the $1.20 mark as European trading floors filled up, down 1.3 per cent on the day at $1.2012. 

Last week the chairman of the Treasury select committee said industry calls for a three-year delay to Brexit were “significant”.

Three senior figures from the City of London appeared before the committee on Wednesday (11 January) to discuss Britain’s future relationship with the European Union.

They said companies would need a three-year “standstill” so they could adjust to new arrangements.

Xavier Rolet, chief executive of the London Stock Exchange, said Brexit posed global systemic risks if carried out too quickly.

Meanwhile Douglas Flint, chairman of HSBC, said London’s ecosystem is like “a Jenga tower”.