Asia markets fell on Monday, with sterling tumbling nearly 0.4 per cent to the dollar.
Sterling tumbled as low as $1.2388 (£1) in early Asia trade, but later retraced some losses, with the pound/dollar pair trading at $1.2419 (£1) at 3:40 p.m. HK/SIN. That was down from levels above $1.2500 (£1.01) in the previous session.
Analysts pointed to a report from the Times of London that suggested Prime Minister Theresa May was preparing for the Scottish government to call a second independence referendum to coincide with the triggering of Article 50 in March.
“If that’s the case, I suspect there’s been a bit of an overreaction here,” Ray Attrill, global co-head of foreign exchange strategy at the National Australia Bank, told CNBC.
Attrill added, “If the market does seriously think there can be another independence referendum much sooner than that, then remembering how hard the pound fell in early September 2014 just in front of the prior referendum, then the memory of that makes Sterling a fairly easy sell here.”