The pound fell sharply yesterday in early morning trading, as markets reacted to the latest instalment of Brexit. Over the weekend, Prime Minister Theresa May used her speech at the Conservative party conference in Birmingham to pledge that the UK will formally trigger Article 50 of the Lisbon Treaty before the end of March 2017, thereby formally beginning the UK’s two-year leaving process and divorce from the EU.

The pound fell to a 3-year low against the euro off the back of the news. It is also now trading back near the 31-year low against the US dollar which it reached in the immediate aftermath of the Brexit vote. Any gains that the pound has made in the last few months are being wiped away swiftly.

The Prime Minister’s tone and remarks about how greater immigration and border control would take priority over retaining any access to the single market raised the possibility of a ‘hard’ rather than ‘soft’ Brexit.

Despite recent economic data from the UK suggesting that it had weathered some of the Brexit storm, it is clear that currency markets still have one eye on the long term impact of leaving the EU.

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* Information courtesy of Currencies Direct
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