Pound slides ahead of May's speech on Brexit

The pound fell to as low as 1.7126 against the Singdollar from 1.7446 last Friday.
The pound fell to as low as 1.7126 against the Singdollar from 1.7446 last Friday.PHOTO: AFP

Fears that Britain will effect a "hard" departure from the European Union rattled financial markets yesterday and sent the pound sliding to three-month lows against the greenback and Singapore dollar.

In a speech today, British Prime Minister Theresa May is expected to give details on her approach to negotiations with the EU.

Concerns over how the exit will play out sent the sterling down as much as 1.9 per cent to 1.1985 against the greenback in Asian trade, before recovering slightly.

The pound fell to as low as 1.7126 against the Singdollar from 1.7446 last Friday, a fall of 1.8 per cent - a tiny drop compared with the pound's 6.8 per cent plunge on June 24 when Britain's referendum result to leave the EU was announced.

Yesterday, bourses across Asia fell as the uncertainty gave investors good reason to take profit. Japan slipped 1 per cent, Hong Kong lost 0.96 per cent, Taiwan fell 0.92 per cent, Malaysia shed 0.82 per cent and Singapore dipped 0.4 per cent. Gold rallied 0.5 per cent to US$1,202.23 an ounce as investors looked to safer havens. The volatility came as Mr Trump pledged to move "very quickly" to secure a trade agreement with Britain after Brexit and predicted that leaving the EU would be a "great thing" for the country, according to reports.

British media said on Sunday that Mrs May will prepare to withdraw from tariff-free trade with the EU in return for the ability to curb immigration and strike commercial deals with other countries.

CIMB economist Song Seng Wun said yesterday that clarity for businesses to remain in Britain was needed."The other EU governments are already dangling incentives to multinationals... There is a dawning realisation that the two-year timeframe may not be sufficient. Singapore firms have to be prepared for that scenario."

A version of this article appeared in the print edition of The Straits Times on January 17, 2017, with the headline 'Pound slides ahead of May's speech on Brexit'. Print Edition | Subscribe