Pound Plunges as Brexit Fears Mount
Markets are on edge as concerns about Britain's exit from the European Union (EU) single market continue to grow. The UK pound has fallen below $1.20 for the first time since October, while equities have slid and gold has climbed in response to Prime Minister Theresa May's apparent willingness to withdraw from tariff-free trade with the EU.
This development comes as US President-elect Donald Trump suggested that other countries may follow Britain's lead and break away from the bloc. May is set to outline her vision for leaving the EU in a speech on Tuesday, which is expected to further fuel market jitters.
The UK currency has been trading with high implied volatility, exceeding 30% - a level only breached before three major events in 2016: Britain's EU vote and the Bank of England's July and August meetings. Meanwhile, gold has risen by 0.5%, continuing its surge from last week.
Caution dominates markets as investors and corporates worldwide worry about the prospect of a hard Brexit. Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd in London, said: 'Markets are trading in risk aversion mode.'