(MENAFN- The Peninsula) London: Sterling skidded to its lowest levels - bar a 'flash crash in October - in 32 years yesterday, hit by fears that Prime Minister Theresa May (pictured) will say today that Britain is set for a 'hard Brexit out of the EU and its single market.
Sterling fell as much as 1.5 percent against the dollar and 2.5 percent against the yen. That shifted the spotlight away from the greenback, which has come under pressure in recent days as investors ponder US President-elect Donald Trump's likely economic policies after he takes office on Friday.
The pound plunged to $1.1983 in early trade in Asia, depths not seen since a bout of thin liquidity triggered a 'flash crash on October 7 that wiped as much as 10 percent off the pound in a matter of minutes. Apart from that, it was the lowest level since May 1985.
By 1230 GMT sterling had managed to climb back above $1.20, but was still trading down more than 1 percent on the day at $1.204.
Dealers said the market was reacting to various media reports over the weekend that said May would signal plans for a 'hard Brexit in her speech today, saying she's willing to quit the European Union's single market in order to regain control of Britain's borders.
'Every time there's ‘hard Brexit' headlines, that triggers a fresh bout of selling sterling, said MUFG currency analyst Lee Hardman, in London. 'It's almost impossible to see Europe allowing the UK to remain a full member of the single market if it wants to regain control of the border and the laws and wants to strike its own agreements. Hardman added that the weekend reports were 'not really new news, as May's government has consistently pointed towards giving priority to immigration controls over single market access, and that was why sterling had not fallen further in London trading hours.
U.S. markets were closed on Monday for Martin Luther King day, which means liquidity will be lower.
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