Responding to accusations that she has sent the Sterling down by a percent, Prime Minister Theresa May has accused the media of misrepresentation.
Furthermore, she confirmed the UK will in fact be a member of the single European market.
GBP/USD is under pressure at the start of the new week with pundits saying it is because the UK is heading for a hard-Brexit.
Sterling slipped in response to a weekend interview where May said the Government would seek full control over UK immigration policy.
The cost of such controls is ejection from the EU single market - EU member states have been quite clear that the UK will not be able to be part of the single market if the movement of their members is restricted.
May’s comments offer nothing new and we agree with those who see the Pound’s decline as something of an over-reaction.
Theresa May has meanwhile on Monday suggested the media have misrepresented her view.
Answering questions at an appearance at the Charity Commission for England and Wales, May says:
“I’m tempted to say the people who are getting it wrong are those who print things saying I’m talking about a hard-Brexit.
"I don’t accept the terms hard and soft Brexit. What we are doing is we are going to get an ambitious, good, best possible deal for the United Kingdom in terms of trading with and operating within the single European market.
“It will be a new relationship because we won’t be members of the EU any longer.”
May has therefore clearly said the UK will remain part of the EU single market, yet we know immigration is a red line.
How she will work this one out is hard to see.
Whatever the case, markets are betting that she will have to concede access to the single market to get her way on immigration.
However, if May confirms over coming weeks that the UK will be plugging for single market membership then Sterling could be in for a powerful recovery.
Merkel Repeats Warning on Single Market Membership
German Chancellor Angela Merkel has meanwhile warned the UK that the European Union must be prepared to limit the UK's access to the single market unless the country allows for the free movement of citizens.
Speaking in Cologne Merkel said there must be no negotiations based on "cherry picking" of the Union's four freedoms of movement for capital, goods, services and people.
"Access to the single market can only be possible on the condition of respecting the four basic freedoms. Otherwise one has to talk about limits," said Merkel