Investing.com - The pound fell sharply against the dollar and the euro on Monday, pressured lower by fears over the prospects of a ‘hard Brexit’ following comments by British Prime Minister Theresa May on Sunday.
GBP/USD fell 1.12% to 1.2146, a level not seen since October 31.
EUR/GBP hit highs of 0.8679, the strongest level since November 15 and was last at 0.8659, up 0.98% for the day.
The selloff in sterling came after May said in a television interview broadcast on Sunday said that the country would not be keeping "bits" of European Union membership.
The remarks were seen as an indication that the UK won’t try to negotiate continued full access to the European single market when it leaves the EU.
Sterling failed to find support after May said on Monday it was wrong to say a "hard Brexit" was inevitable.
"I'm tempted to say that the people who are getting it wrong are those who print things saying I'm talking about a hard Brexit, (that) it is absolutely inevitable there's a hard Brexit," she said.
"I don't accept the terms hard and soft Brexit. What we're doing is going to get an ambitious, good and best possible deal for the United Kingdom in terms of ... trading with and operating within the single European market," she added.
Demand for the dollar continued to be underpinned after Friday’s U.S. nonfarm payrolls report for December, which showed a slowdown in hiring but the fastest wage growth in over seven years, supported the case for rate hikes this year.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.28% to 102.46.
The Federal Reserve has indicated that three quarter-percentage-point interest rate increases are on the cards for 2017.
Higher rates boost the dollar by making the currency more attractive to yield-seeking investors.