After climbing for most of the week against the major currencies the British tumbled by it’s biggest margin in almost a year on Friday after a speech by Theresa May which dramatically incresded the odds that the UK was headed for a hard Brexit.
Mrs May noted on Friday that her government had reached a stalemate ovet the conditions surrounding Brexit and issued a stern warning to the European Union that the UK will stand its ground to get a good deal.
“I will not overturn the result of the referendum, nor will I break up my country, we must and will prepare ourselves for no deal”. Prime Minister May said.
“Anything which fails to respect the referendum or which effectively divides our country in two would be a bad deal and I have always said no deal is better than a bad deal,” she added.
The immediately fell by more than 2c against its US counterpart and the beginning of next week will be crucial in order to stem any further losses.
Some say the strong words form May were staged to pressure the EU into a deal that would ensure a smoother Brexit but the ploy is likely to backfire and as the day’s go buy and a hard Brexit becomes more likely, the Sterling is in for more pain.
“May seems willing to call the EU’s bluff here, sticking to her guns,” said Valentin Marinov, head of Group-of-10 foreign-exchange research at Credit Agricole SA.
“Trading GBP off the Brexit headlines has been plagued by fatigue in recent days, and we may see a bit of revival in the downside GBP hedges.” He added.