Pound plunges as May hints at single-market exit

LONDON — The British pound plunged on Monday (Jan 9) after Prime Minister Theresa May’s comments over the weekend stoked fears that the United Kingdom will lose access to Europe’s single market.

By mid-afternoon in London, the pound was down 1.3 per cent at US$1.2127, bringing its decline since the June 23 Brexit referendum to more than 18 per cent. It was also down 1.3 per cent versus the Singapore dollar at S$1.7450, translating into a loss of more than 12 per cent since the June vote.

Ms May said in Sky News interview broadcast on Sunday that leaving the European Union will be about “getting the right relationship, not about keeping bits of membership.”

“She signalled once again that the aim of controlling immigration was a red line she would not be willing to cross,” said Ms Esther Reichelt, a currency strategist at Commerzbank in Frankfurt.

“That means that following Brexit, the country is likely to lose access to the single market,” she said, adding that until the British government finally presents a concrete and convincing strategy, market participants will increasingly fear a disaster.

“It looks almost certainly now like a hard Brexit, and the market doesn’t like it. It’s a political crisis in the brewing here, for sure,” said Mr Erik Nielsen, global chief economist at UniCredit in London. BLOOMBERG