The pound has taken another pummeling overnight, falling more than six per cent against the US dollar when currency markets opened in Asia. Sterling sunk below $1.20 to a low of $1.1841, the lowest point since May 1985.
The 6.1 per cent drop was the biggest since June 24, the day of the Brexit vote. The fall was so severe that some speculated it was due to a broken algorithm, made worse by low liquidity in early Asian trading.
The currency has now regained some ground and is down 1.24 per cent at $1.2459.
It's been a tough week for the pound; the currency has fallen 4.6 per cent after Prime Minister Theresa May set out her timetable for Brexit and said Article 50 would be triggered by March 2017. She also signalled that she would be prioritising immigration controls, which could come at the expense of gaining access to the EU single market.
The slump in the pound did lead to the FTSE 100 smashing the 7,000 mark, but some are sceptical that the gains will keep coming.
Although May said there was a false dichotomy being drawn between immigration controls and free market access, German Chancellor Angela Merkel hit back shortly afterwards and suggested Britain will have to make a choice.
Speaking to a business audience in Berlin, Merkel said: "If we don't say that full access to the internal market is linked to full acceptance of the four fundamental freedoms, a process will spread in Europe in which everyone does what they want."
Merkel said the upcoming negotiations between Britain and the EU "won't be easy" in her clearest signal yet that she won't be playing soft if Britain goes for a hard Brexit.
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