Britain's pound has fallen to its lowest level since the so-called October Flash Crash as investors count the cost of the country's divorce from the European Union and its impact on the world's sixth-largest economy.
The pound fell as much as 1% against the U.S. dollar to trade at $1.2055 by 15:45 p.m. GMT, extending a three-day decline that has cut more than 1.85% of the currency's value in the wake of remarks from Prime Minister Theresa May that suggested the government was leaning towards a "hard Brexit" from the EU -- a divorce that favors curbing immigration over preserving single-market access.
The move pegs the pound at the lowest level against the dollar since the "Flash Crash" of Oct. 7, when a suspected trading error caused the currency pair to change hands at 1.1985. Stripping that errant transaction from the data, however, and you will need to go all the way back to 1985 to find a lower trading level.
The currency was also pushed down by a widening trade deficit, which swelled to £12.2 billion in November as imports grew by £3.3 billion while exports rose by £700 million, according to data from the U.K.'s Office for National Statistics, which appeared to dispute claims that a devalued currency would make British goods more attractive to overseas customers.
The road to Brexit has not been smooth for the government and reports today reveal that cabinet ministers think they are likely to lose a court case that could hamper May's March 2017 timeline for triggering the Article 50 exit clause starting the on a two-year transition out of the EU.