The pound fell against the dollar, dropping 1.4pc below $1.20 for the first time since October’s flash crash, after reports said that Prime Minister Theresa May will signal plans to quit the European Union’s single market to regain control of Britain’s borders and laws.

Sterling declined against all of its major peers after it was reported that Mrs May will prepare to withdraw from tariff-free trade with the region in return for the ability to curb immigration and strike commercial deals with other countries. The prime minister is due to give a speech tomorrow.

The currency has fallen 19pc against the dollar since the nation opted to leave the EU in June’s referendum, with declines since the initial aftermath of the vote mainly sparked by concern that Mrs May would pursue a so-called hard Brexit.

The report didn’t say how the information was obtained, and the prime minister’s office declined to comment on the report. Government officials told the Sunday Times they expect her speech on Tuesday to cause a further “market correction”.