Investing.com - The pound weakened in early Asia on Tuesday ahead of a highly-awaited speech by British PM Theresa May with the Telegraph newspaper reporting her 12 priorities for Brexit will include leaving the European Union's single market and customs union.
GBP/USD traded at 1.2023, down 0.22%, while USD/JPY changed hands at 114.07, down 0.11% on continued safe haven demand for yen. AUD/USD traded at 0.7470, down 0.11%. In Australia, data on home loans for November is due with a 0.9% gain seen as well as invest housing finance, last up 0.7%.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, last traded up 0.36% to 101.53.
Overnight, sterling fell to the lowest levels since October’s flash crash on Monday as investors fretted over Brexit, while the safe haven yen gained ground amid uncertainty over President-elect Donald Trump’s plans to boost the U.S. economy.
The fall in the pound came ahead of a speech by May on Tuesday where she is expected to outline plans for Britain’s exit from the European Union.
Investors fear that May will outline plans to sacrifice access to the single market and the customs union in order to regain control over immigration and bilateral trade deals in a so-called "hard Brexit".
Sterling had already weakened broadly last week after May said that the U.K. would not be able to keep "bits" of its EU membership after Brexit.
A spokeswoman for the prime minister said Monday that reports that she will unveil plans for a "hard Brexit” in the speech are "speculation".
Sterling found some support after U.S. President-elect Donald Trump said in a newspaper interview that he welcomed Britain's decision to leave the EU and added that he will offer the U.K. a “fair” trade deal.
Uncertainty over the incoming Trump administration’s plans for fiscal stimulus, deregulation and tax cuts, as well as the fall in the pound continued to dominate market sentiment.
Trade volumes were thin on Monday, with U.S. financial markets shut for Martin Luther King Day.