Pound slumps to lowest level since October amid hint of 'hard Brexit' from PM

The pound slumped to its lowest level since October on Monday, following indications from Prime Minister Theresa May that Britain is heading for a so-called "hard Brexit".

Sterling was down against the euro at 1.15 and fell a cent against the greenback to 1.21 dollars.

On Sunday Mrs May said the British Government is "working to get the best possible deal" for the UK on the issue of trade.

But she stressed the importance that will be given to gaining full control over immigration during divorce negotiations with Brussels.

Pressed on the issue of single market membership, the Prime Minister said some people had suggested the UK could "keep bits" of EU membership as it looks to leave the bloc.

Mrs May appeared to shut down that possibility as she said: "We are leaving. We are coming out. We are not going to be a member of the EU any longer."

The pound has dropped around 18% against the US dollar and 10% versus the euro since the June 23 vote as traders expect the British economy to be significantly weaker once it quits the European Union.

Asked whether her comments were responsible for the fall in the value of the pound, Mrs May told a press conference in London: "I'm tempted to say that the people who are getting it wrong are those who print things saying I am talking about a hard Brexit (and that) it's absolutely inevitable there's a hard Brexit.”

"I don't accept the terms hard and soft Brexit.”

"What we are doing is going to get an ambitious, good, best-possible deal for the United Kingdom in terms of trading with and operating within the single European market.”

"But it will be a new relationship because we won't be members of the EU any longer. We will be outside the European Union and therefore we will be negotiating a new relationship across not just trading but other areas with the European Union."

Photo: Jim Watt