Single Market blues: The pound's fallen to its lowest level against the dollar since October

 
Emma Haslett
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Taking a dive: the pound was at its lowest against the dollar since October (Source: Getty)

The pound today fell to its lowest level against the dollar since October last year, after comments by Theresa May caused investors to shy away from the currency.

The pound plunged one per cent to $1.2122 in afternoon trading. It also fell more than one per cent against the euro, to a day-low of €1.1491, before closing at €1.1504.

The slide pushed the FTSE 100 to open at yet another record high, with the blue-chip index rising as far as 7,239.26 points. It closed at 7,237.77 points.

The fall came after the Prime Minister said remaining a member of the single market will not be a priority in Brexit negotiations, instead opting to keep "bits" of the current deal.

"I'm looking at the outcome, and the outcome is a really good, ambitious trade deal for the UK with the European Union that enables our companies to trade in and operate in the European Single Market," she told Sky News.

"And that's for both goods and services, because of course for the UK, financial services - and the services sector generally - is a very important part of our economic relationship with the EU."

Read more: Sterling's post-referendum collapse didn't provoke a foreign takeover rush

Theresa May also said she does not "accept the terms soft and hard Brexit".

"Yet again the fall in sterling has become the primary means by which the FTSE has risen, with some of the big names from the summer bounce, such as Reckitt Benckiser and Imperial Brands, making gains," said Chris Beauchamp, chief market analyst at online trader IG.

"However, outside the UK, global risk appetite seems muted at best. Dow 20,000 is still out of reach, and the waiting has gone on so long that it has now become something referred to ironically at best, rather than in the hopeful fashion that prevailed before Christmas."

Analysts worried investors will lose confidence in the pound until more information is available.

"Details will follow in the coming weeks, while the selling pressures on the pound will certainly stay until more details are revealed," said Ipek Ozkardeskaya, senior market analyst at London Capital Group.

Read more: Top Tory MPs warn hard Brexit could cost party the next election

However, others tried to look on the bright side.

"While the pound is once again suffering at the prospect of this, as often happens when the reality starts leaning more towards hard Brexit, it’s worth remembering that the outcome is not binary and the reality will fall somewhere in the middle," said Craig Erlam, senior market analyst at Oanda.

"While most people are aware of this, markets can often be more irrational, particularly in the early stages. I think we’re reaching a point where the government’s position is becoming quite clear and while the pound may weaken further as the data deteriorates, it may become less sensitive to Brexit rhetoric going forward."

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