Sterling falls below $1.20 as Pacific markets open following reports Theresa May will pursue hard Brexit

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The pound slumped more than one per cent to a three-month low this evening, on fresh concerns the government is preparing to pursue a hard Brexit. 

As market trading resumed in Australia and New Zealand, sterling fell by as much as 1.6 per cent to $1.1983, taking it below $1.20 for the first time since the October flash crash. 

The pound's fall has come off the back of reports in Sunday newspapers that later this week Prime Minister Theresa May will say the UK is prepared to leave the Single Market, customs union and the jurisdiction of the European Court of Justice. 

The speech, on Tuesday, will set the course for the UK's exit from the European Union. 

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"The FX market has spoken, and, as of Sunday night, it is not confident that Theresa May can deliver the necessary clarity and confidence when she lays out her Brexit plans in a speech on Tuesday," said Kathleen Brooks research director at City Index Direct.

"GBP/USD fell below the key psychological level of $1.20 at the start of play, suggesting that Theresa “pound slayer” May, could strike once again and we may see further declines in sterling this week."

In October, sterling was rocked by an overnight freak flash crash in which the currency dropped six per cent against the dollar in a matter of minutes. 

In June, the pound fell to a (then) 31-year low against the dollar in the days following the surprise, pro-Brexit result of the EU referendum.