The pound tumbled against all of its peers into an eight-week low versus the dollar, after U.K. Prime Minister Theresa May was given the go-ahead to trigger Brexit.
Sterling had a delayed reaction to the news, which was out late Monday in London and gives May the chance to formally kick off negotiations with the European Union.
Investors had been reluctant to sell the pound during Tokyo trading hours as markets were quiet before the Federal Reserve policy decision on Wednesday. The selloff comes a day after Scottish First Minister Nicola Sturgeon signaled the start of a legal process for an independence referendum.
The pound, being one of the major victims of the U.K.’s vote to exit the EU, has fallen about 19 percent against the dollar since the June referendum. Sterling has also shown a propensity to drop after new developments in the Brexit process, even if, as is the case for Monday’s votes, they have been widely expected.
Sterling fell as much as 0.9 percent to $1.2110 on Tuesday, its lowest since Jan. 17, the day May outlined her Brexit plans which would prioritize regaining control of laws and immigration at the cost of losing access to the single market.
Jane Foley, a senior currency strategist at Rabobank International in London said, “Now that Parliament have cleared the way for Theresa May to trigger Article 50, there is a real realization in the market that the U.K. government is right on the edge of potentially difficult negotiations with the EU regarding Brexit. This could unleash a whole new catalog of uncertainty about the U.K.’s future relationship with the EU many of which could be detrimental to investor confidence.”