The pound collapsed against all major currencies last night after U.K. Prime Minister Theresa May talked of the sort of definitive break from the European Union that many traders believe will cause Britain to lose access to its major trading partner, the European Union.
Sterling fell 1.22% to $1.21 against the greenback, not seen since October last year. It was down 1.34% against the euro at €1.15.
May reiterated again that she was not prepared to compromise immigration control in order to remain in the single market. May also said that she’ll unveil details of her Brexit strategy in the “coming weeks,” rejecting claims from her critics that her government’s plans were muddled.
German chancellor Angela Merkel also reiterated last night that full access to the single market would require the U.K. to adhere to the free movement of goods, services, capital and people.
Currency strategist including those at easyMarkets, now expect a hard Brexit with the currency testing support at 1.2080 and 1.2000 initially before proceeding lower.
The weakness in the Greenback also saw other currencies higher last night. USD/JPY declined from 117.53 to currently test support levels at 116.00. A break from here will see the currency lower.
In energy, oil prices saw their largest fall in a month last night with indications suggesting that the glut of oil may not go away as quickly as traders had expected.
Increasingly there are signs that Iranians are taking advantage of higher prices to sell more. The country’s floating storage has nearly halved since September, down to 17 million barrels from 32.5 million, according to ClipperData.
The firm also reported that Iraqi exports going through the southern oil ports of Basra are just short of 3.5 million barrels a day in January, the highest in four years of tracking this data.
WTI for February delivery settled down 3.8% or $2.03 to $51.96 a barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, also lost 3.8% or $2.16 to $54.94 a barrel on ICE Futures Europe.
The decline in oil prices also led the U.S. Indexes lower. The Dow Jones Industrial Average fell 0.4% or 76 points to 19887, the S&P 500 declined 0.4% to 2268.9 while the Nasdaq Composite edged up 0.2% to 5531.82 on gains in tech and biotechnology shares.
Elsewhere, the Stoxx Europe 600 fell 0.5% its biggest decline in almost a month while the U.K.’s FTSE 100 rose 0.4% to notch its eighth consecutive record close.
