The pound fell Monday to its lowest level since October after Prime Minister Theresa May suggested the country was heading for a full break from the European Union.
The pound dropped against the dollar to $1.21 after May signaled in an interview with Sky News over the weekend that the U.K. is likely to leave the bloc's single market in goods and services. She said Britain won't try to keep "bits of membership'' once it leaves.
EU membership guarantees free movement of people, money, goods and services across its 28 countries. The British government is interested in limiting immigration while retaining access to the EU market for its companies. But the EU says Britain cannot pick and choose what parts of EU membership it keeps.
Some traders read May's comments in the interview to suggest she was prepared to pull Britain from the single market and have it trade with the EU as if it were any other country outside Europe, without any form of privileged status.
On Monday, May denied setting Britain on the road to a "hard Brexit.''
"I don't accept the terms hard and soft Brexit,'' she said. "What we're doing is going to get [an] ambitious, good, best-possible deal for Britain.''
The pound has dropped almost a fifth against the dollar since the June 23 vote.