The pound fell against both the dollar and the euro in lunchtime trading, after European Commission president Jean-Claude Juncker warned the next round of Brexit talks will be "harder".
Sterling was down 0.9 per cent against the euro, at €1.1298, and 0.8 per cent against the dollar, at $1.3327, despite European leaders giving the green light for Brexit talks to continue to the next stage.
But comments by Juncker earlier in the day, in which he suggested the next round of talks will be "significantly harder than the first and the first was very difficult", caused traders to lose confidence, sending the pound into a spin.
“The EU and British government have formally agreed to move the Brexit negotiations onto phase two, but with the European team holding all the cards, it hasn’t been good news for the pound," said Dennis de Jong, managing director at UFX.
“Theresa May arrived in Brussels for talks having already made a number of concessions, and after her government’s humiliating defeat on a Brexit vote in parliament on Wednesday night, any strength she may have had at the negotiating table has been lost even further. Traders have reacted as they have throughout the Brexit process, with sterling sliding this morning against the dollar and the euro.
“With a long road, and potentially even more chastening days ahead for May, expect the pound to continue to suffer as talks carry on into the new year.”