The British pound sank to a two-month low versus the U.S. dollar on Monday morning, hit by both strong labor data out of the United States and comments from the British Prime Minister over the weekend suggesting the U.K. may be on track to leave the European single market.
Sterling broke below 1.22 U.S. dollars at around 6.00 a.m. London time, a level seen as an important support point by foreign exchange traders, reaching lows untested since the final days of October. At around 10:00 a.m. the U.K. currency hits its intraday lowpoint (so far), trading below 1.215 before working its way back up to around 1.217 at 12:25 p.m.
Comments over the weekend during an interview with Sky News from U.K. Prime Minister Theresa May were widely interpreted as confirming that she will prioritize keeping control of immigration in the hands of her government over favoring access to the European single market once the U.K. leaves the European Union (EU). The single market is a tariff-free trade agreement within the EU and is seen as crucial for certain sectors such as car manufacturing.
"Often people talk in terms as if we are leaving the EU but we still want to keep bits of membership of the EU. We're leaving, we're coming out," May stated.
The prime minister also reconfirmed her earlier commitment to trigger the "Article 50" clause which will set in motion the two-year timeline (extendable if agreed by both sides) for the country's exit from the regional trading bloc.