The pound is bombing as fears grow over a 'hard Brexit'

The pound is diving against the dollar and euro on Monday morning after Theresa May set a date for the beginning of official Brexit proceedings on Sunday.

Sterling is down 0.73% against the dollar to 1.2883 at 8.15 a.m. BST (3.15 a.m. ET):

Meanwhile, the pound is down 0.58% against the euro to 1.1476. Here is how it looks at the same time:

While these might not sound like big moves in percentage terms, it marks a 7-week low against the dollar for sterling. The pound is also now perilously close to its post-Brexit referendum low of $1.2798.

The pound has not spent much time below $1.30 since the June 23 vote for Britain to leave the European Union and its current level is lower than the rate hit during the depths of the 2008 financial crisis.

The catalyst for the slump is Theresa May's announcement on Sunday that Article 50 will be triggered before the end of March 2017. Article 50 starts the clock on Britain's 2-year window to officially leave the European Union and the creepy realisation that it is actually happening is spooking the City.

Traders are also not liking how Brexit is shaping up either, with a "hard Brexit" looking increasingly likely. A "hard Brexit" is one where Britain severs all ties with the EU immediately and then renegotiates all deals.

This would see Britain lose access to the single market and financial firms lose their passporting rights, meaning they would have to relocate many operations to an EU country or stop operating across the EU.

FXTM's Chief Market Strategist Hussein Sayed says in an emailed statement on Monday:

"Theresa May announced on Sunday that U.K.'s divorce from the EU will start within 6-months. Article 50, the official notification to Britain's partners will be triggered before the end of March 2017, which gives another two years to agree on the terms of the most complicated divorce in recent history.

"The pound's imminent reaction was a drop of 0.5% against the dollar in early Asian trading session, nothing compared to the 11% freefall after UK's vote to leave the EU on June 23. Now with the timeline being set, the negotiation of the terms will be a key driver for sterling going forward, but I expect it to be rough ride in the next few months."

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