Investing.com - The pound fell to the weakest levels since October’s flash crash on Monday, ahead of a speech by U.K. Prime Minister Theresa May on Tuesday, where she is expected to outline plans for Britain’s exit from the European Union.
GBP/USD hit lows of 1.1988, falling below the 1.20 level for the first time since October’s flash crash, and was last at 1.2039, off 1.09% for the day.
Sterling hit lows of 1.1841 on October 7, the lowest level since 1985.
The pound hit two-month lows against the euro, with EUR/GBP advancing 0.93% to 0.8814.
Investors fear that May will outline plans for the U.K. to leave the single market and the customs union in order to prioritize immigration controls and bilateral trade deals in a so-called "hard Brexit".
The prime minister has indicated that she intends to trigger by the end of March the formal process of beginning Britain's exit from the EU, but has yet to spell out details of the governments negotiating strategy.
Sterling had already weakened broadly last week after May said that the U.K. would not be able to keep "bits" of its EU membership after Brexit.
Meanwhile, the dollar fell to its lowest levels since early December against the traditional safe-haven yen as investors looked ahead to U.S. President-elect Donald Trump's inauguration on Friday.
USD/JPY hit lows of 113.63, the weakest since December 8 and was last at 114.04, down 0.45% for the day.
Uncertainty over the incoming Trump administration’s plans for fiscal stimulus, deregulation and tax cuts, as well as the fall in the pound continued to dominate market sentiment.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, climbed 0.43% to 101.61, boosted by weakness in the euro.
EUR/USD was down 0.43% at 1.0596.
Trade volumes were expected to remain thin on Monday, with U.S. financial markets shut for Martin Luther King Day.