London: The pound tumbled against all of its Group-of-10 peers as London traders sold the currency after UK Prime Minister Theresa May was given the go-ahead to trigger Brexit.
Sterling had a delayed reaction to the news, which came out late Monday in London and gives May the chance to formally kick off negotiations with the European Union. Market participants had reluctant to sell the currency during Tokyo trading hours markets were quiet before the Federal Reserve meeting on Wednesday, according to Masashi Murata, a currency strategist at Brown Brothers Harriman.
The sell-off comes a day after Scottish First Minister Nicola Sturgeon signalled the start of a legal process for an independence referendum.
The pound has been one of major victims of the UK’s vote to exit the European Union, and has fallen about 19 per cent versus the dollar since the June referendum. Sterling has also shown a propensity to drop after new developments in the Brexit process, even if, as is the case for Monday’s votes, they have been widely expected.
“Now that Parliament have cleared the way for Theresa May to trigger Article 50, there is a real realisation in the market that the UK government is right on the edge of potentially difficult negotiations with the EU regarding Brexit,” said Jane Foley, a senior currency strategist at Rabobank International in London. “This could unleash a whole new catalogue of uncertainty about the U.K.’s future relationship with the EU many of which could be detrimental to investor confidence. Sterling has really reacted to that.”
Sterling fell as much as 0.9 per cent to $1.2110 on Tuesday, its lowest since January 17, the day May outlined her Brexit plans which would prioritise regaining control of laws and immigration at the cost of losing access to the single market.
