The pound came within a whisker of a new 31-year low against the dollar after the currency market sensed the UK moving towards a “Hard Brexit” position in its negotiations for exiting the EU.

Sterling was left exposed after UK prime minister Theresa May told the Conservative party conference at the weekend that Britain would trigger Article 50, the official legal notification that would formally begin negotiations with the remaining EU powers, “no later than the end of March”. That set the UK up to leave the EU by 2019.

Against the dollar, sterling was down 1.2 per cent at $1.2815, within touching distance of the July 6 drop to $1.2796 when the pound hit its lowest level since 1985.

The pound was 0.9 per cent weaker against the euro, with as much as £0.8737 needed to buy a unit of the single currency, a level not touched since 2013.

“The decline in sterling is another reminder that the market doesn’t like the uncertainty that Brexit is bringing, that the negotiations will be hard and that the probability of a hard Brexit has increased,” said Charles St Arnaud, Nomura FX strategist.

While Mrs May’s Article 50 comments provided some clarity on the timing of negotiations, there was little on their outcome, “which is what matters for most businesses”, Mr St Arnaud added.

Kit Juckes at Société Générale described the date as bringing “a bit of clarity, but not much joy” for the pound.

“Disappointment for those clinging to the hope that it would never happen, or one of the many layers of uncertainty plaguing sterling assets removed? You could read it either way,” he said.

(Financial Times)