Sterling sinks against the euro and the dollar as traders watch May's address on Brexit

Lucy White
British Prime Minister Delivers Landmark Brexit Speech
Source: Getty

Prime Minister Theresa May has set out her vision for Brexit at a speech in Florence which, although it only contained a few specific points such as the confirmation of a transition period and the UK's exit from the single market, caused the pound to sink against the euro and the dollar.

Read more: The pound has tumbled ahead of Theresa May's big Brexit speech - as strong data pushes up the euro

Sterling began to climb as the Prime Minister outlined the ways in which the UK is cooperating with Europe, striking a more conciliatory tone than many expected.

But as May progressed to say that the UK electorate was disillusioned with EU bureacracy, the pound plummeted against the dollar back to $1.353.

Just minutes later she confirmed that the UK would not be part of the EU's single market, stamping out any recovery the currency was making.

Read more: Theresa May has proposed a transition period during Brexit speech in Florence

As May ruled out a Canada-style trading agreement, saying the UK and the EU already had a pre-existing relationship and could do "so much better", sterling took a nosedive against the euro to hit a day low of €1.129.

It kept heading down as May noted the importance of cooperation on security, grounding at €1.273. Against the dollar, sterling bottomed out to $1.349.

May advised that there should be nothing controversial in her speech, and that the government would work with the EU to create a "lasting relationship". The pound began to pick up once more against the euro and the dollar as she confirmed the departure would be made as soon as possible, and would involve a two-year transition period.

By the time May finished, outlining her hope for a strong future between the UK and the EU, the sterling was stuck against the dollar and the euro at $1.351 and €1.128.

The FTSE fared well as sterling devalued, hitting one-week highs as it climbed 0.65 per cent on the previous close.

Read more: Business is counting on Theresa May to break the Brussels impasse

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