The pound slumped to its lowest point for more than three months after reports that Theresa May is heading for a “hard Brexit”.
Before making a slight recovery today, Sterling fell to below 1.20 dollars – its lowest point since October’s “flash crash”.
The drop comes ahead of the Prime Minister’s announcement on Tuesday regarding her approach to Brexit negotiations.
Various Sunday newspapers said Mrs May was heading towards a departure from the single market.
Sterling’s slump in the Asian markets also came after Chancellor Philip Hammond suggested ministers could slash corporation tax rates if Briton was frozen out of the single market.
Mr Hammond told a German newspaper that the Government would do “whatever we have to” to ensure UK businesses would stay competitive.
Downing Street would not be drawn on reports Mrs May would announce plans to withdraw from the single market and the European customs union during her speech at London’s Lancaster House.
But The Sunday Telegraph quoted a government source as saying: “She’s gone for the full works. People will know when she said ‘Brexit means Brexit’, she really meant it.”