Sterling falls to seven-week low as May commits to triggering Article 50 by end of March

The Conservative Party Conference 2016 - Day One
Sterling has dropped during trading in Asia (Source: Getty)

Sterling approached a new post-referendum low today after Prime Minister Theresa May said negotiations to leave the EU will start by the end of March next year and signalled she will not prioritise Single Market access.

The pound drifted lower throughout the day, falling 1.1 per cent through Monday's session to stand at $1.2827

crashed to $1.2827 in the minutes after London traders clocked on to their shifts, down 0.89 per cent from Friday's close. It also slipped 0.9 per cent to €1.1442 against the euro.

Strong manufacturing figures helped sterling recover some of its earlier afternoon losses, though the rot could not be stopped for long, with the slide resuming in early afternoon.

The falls below the key benchmarks of $1.30 and €1.15 have raised fears about how far the currency can drift with the prospect of unprecedented uncertainty on the horizon in the shape of crucial exit negotiations between the UK and the EU.

European leaders have made clear those discussions will only begin once Article 50 is triggered, and the sides will have two years to negotiate the precise terms of Brexit.

The City has called for the government to avoid volatility by creating a transition period as part of the Article 50 negotiations. This would allow the UK to hold onto its rights for longer than it would otherwise.

Read more: City calls for transition period to avoid Brexit with a bump

Kathleen Brooks, research director at City Index, said: "May’s speech seems to suggest that the UK’s Prime Minister is content with winning back the UK’s 'sovereignty' at the cost of a period of economic disruption, which is likely to be negative for the pound.

"While sustained pound weakness may be less fierce than it has been in recent months – sterling had its worst quarterly performance between June and September since 1984 - we continue to think that the balance of Brexit talk remains bearish for the pound, and sterling could remain unloved into the end of this year."

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