Pound hits new low after Theresa May’s Brexit remarks

Sterling at $1.21, its lowest since 1985, after prime minister says UK will not hold on to “bits of EU membership”.

Britain''s Prime Minister Theresa May poses with a poppy after buying it to mark this year''s Poppy Appeal, at Number 10 Downing Street in central London
May said UK would not hold on to "bits of membership of the EU" [Stefan Wermuth/Reuters]

The British pound has fallen to its lowest level against the US dollar since 1985, after the UK prime minister hinted at a complete break with the European Union following the conclusion of the Brexit negotiations.

Foreign currency markets had the pound at $1.21 on Monday, down from $1.46 on the day before the referendum to leave the EU in June last year.

In an interview with British broadcaster Sky News on Sunday, Theresa May said the UK would not hold on to “bits of EU membership”, but cautioned that a so-called hard Brexit was not an inevitability.

“Often people talk in terms that we’re leaving the EU but we’re going to keep bits of membership of the EU,” she told Sky.

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“We’re leaving, we’re coming out, we’re not going to be a member of the EU any longer.”

May said her government’s priority would be to negotiate the best possible deal for the UK.

The pound’s performance is seen by analysts as an index of the confidence financial markets have in the UK economy after the vote to leave.

Previous rallies

The pound has previously rallied after signs that the UK may remain in the European single market.

Yet, it has also fallen on comments by senior ministers that the government is willing to sacrifice single market membership as a cost of leaving the EU.

Tim Farron, the leader of the pro-EU Liberal Democrat Party, said May’s comments were hurting the British economy.

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“Every time Theresa May opens her mouth on Brexit, the pound falls further. It’s clear this government is taking us down a destructive hard Brexit that would hurt jobs, increase prices and blow a hole in the budget,” Farron said in a statement.

Since the vote to leave the EU, the British government has not spelled out its negotiating terms, despite promising to invoke Article 50 of the Lisbon Treaty to leave the bloc by March this year.

Once negotiations start, they must conclude within two years.

This week, the Economist magazine labelled May “Theresa Maybe” for her purported inability to spell out the terms of Britain’s exit from the union.

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Source: Al Jazeera