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Pound holds near three-decade low amid fears of 'hard' Brexit
[SYDNEY] The pound held near a three-decade low it touched in the days following June's Brexit referendum after UK Prime Minister Theresa May said she'll begin the process of withdrawal from the European Union in the first quarter of 2017.
Sterling, which on Monday dropped to the weakest level since July 6, is the worst performer this year in a basket of 16 major currencies. Ms May told delegates at her Conservative Party's annual conference that she'll curb immigration, stoking speculation the UK is headed toward a so-called hard Brexit - with limited access to the EU's single market.
While the March trigger date gives "greater clarity about the Brexit timeline," Ms May's pledge to "control immigration and law-making which are cornerstones of EU Single Market access, and the lack of other substantive details has raised concerns that a 'hard Brexit' could eventuate," Commonwealth Bank of Australia strategists Peter Dragicevich and Elias Haddad wrote in a research note.
The pound was little changed at US$1.2858 as of 9:15am in Tokyo Tuesday. It fell to US$1.2818 Monday, the lowest since dropping to a 31-year low in July.
The Bloomberg British Pound Index, which measures the UK currency against major peers, slumped to the lowest since the data began in 2004. The yen fell 0.3 per cent to 102 per US dollar.