SINGAPORE - The British pound slumped after British Prime Minister Theresa May on Tuesday night (March 28) signed the country's divorce papers to exit the European Union.
The ties that have bound Britain to the EU since 1973 will start to unravel at around 1:30pm in Brussels on Wednesday (7:30pm Singapore time) when Britain's ambassador hands EU President Donald Tusk the hand-signed letter from May invoking Article 50 of the Lisbon Treaty. No country has ever activated the mechanism so markets are nervous about entering this unchartered territory.
The pound sank 1.3 per cent to US$1.2394 against the US dollar. Against the Singapore dollar, the pound was trading down 1.18 per cent at S$1.7312 at 8:12am, from its close of S$1.7520 on Tuesday.
Sterling has weakened some 13 per cent against the Singapore currency since June 23 last year when Britons voted to end their 43-year-old membership of the EU. The pound, which was at S$1.9917 on June 23, has also lost about 15 and 16 per cent of its value against the US dollar and the euro.