Sterling tumbles on Brexit worries following UK's May's comments: Jan 10, 2017

Market Review - 09/01/2017  23:11GMT 

Sterling tumbles on Brexit worries following UK's May's comments

The British pound tumbled across the board on Monday after weekend comments from British Prime Minister Theresa May over the weekend triggered speculation of the possibility of a "hard" Brexit. 

Speaking to Sky News television on Sunday, May sidestepped questions on whether she would prioritise curbing immigration from the European Union over Britain's preferential access to the bloc's single market but said it was not a "binary choice". 

"Over the coming weeks, I'll be setting out more details of my plan for Britain, yes that's about getting the right deal for Brexit, but it is also about economic reform ... It's about getting the right deal internationally but it's also about a fair deal at home," she said. 

Earlier in the day, cable opened lower in New Zealand and despite staging a rebound to 1.2270 in Asia, price met renewed selling and tumbled to 1.2165 at European open, then to a fresh 2-month trough at 1.2125 in European morning due partly to cross-selling of sterling especially vs euro. however, intra-day broad-based weakness in the greenback helped price stage a minor recovery in New York session. 

Versus the Japanese yen, although the greenback traded with a firm bias in Asia and gained to session high at 117.53 ahead of European open, price pared its gains and tanked to 116.15 in New York morning on broad-based buying of the Japanese currency, price hit session lows of 115.97 before staging a minor recovery. 

The single currency traded sideways in Asia and briefly edged up to 1.0556 in early European morning on cross-buying of euro vs sterling. Later, price came under selling pressure and dropped to session low of 1.0511 in Europe before staging another rebound in 1.0583 near New York midday. 

In other news, Fed's Rosengren said 'Fed is likely to gradually normalise policy; 3 rate hikes in 2017 reasonable if economic growth continues to outpace potential; if Fed does not raise U.S. interest rates it risks excessive inflation; more regular rate hikes warranted, though not as fast as in 2004-06; U.S. unemployment is at long-run sustainable lvl; inflation is nearing Fed's 2% goal; expected to reach inflation, employment goals by end of 2017.' 

On the data front, Destatis said that German Industrial Production rose to a seasonally adjusted annual rate of 0.4%, from 0.5% in the preceding month whose figure was revised up from 0.3%. Analysts had expected German Industrial Production to rise 0.6% last month. 

Data to be released on Tuesday: 

UK retail sales, Australia retail sales, Japan consumer confidence, Swiss unemployment rate, France industrial output, Canada building permits, U.S. redbook, wholesale inventories and wholesale sales.