The pound has dropped to a 31-year low as investors fret over the British government's suggestion it will focus on controlling immigration in its talks to leave the European Union.

Sterling dropped to below 1.28 US dollars on Tuesday, days after British Prime Minister Theresa May clarified the timeframe for Britain's exit from the bloc, saying she will trigger two years of formal exit talks before April.

But members of her governing Conservative Party are wrestling over control of the steering wheel that will take Britain toward either a looser but still intertwined relationship with the bloc, or a dramatic "hard Brexit" with unknown consequences.

Hard-core Brexiteers believe regaining control - over financial rules, business regulations and especially over immigration - is more important than remaining in the EU's single market or customs union.

The EU insists Britain cannot choose to benefit from access to the single market without also keeping open its borders to EU citizens.

Markets analyst Michael Hewson said the tone of May's remarks suggested Britain could be veering towards a "hard Brexit" and markets reacted over the "perception that could cause a significant amount of disruption."

Hewson said there was scope for further Sterling weakness, especially against the US dollar with the potential for the Federal Reserve to raise interest rates by December.

London - 4 October 2016

1. Entrance of CMC Market in the City of London

2. Various of screens showing live currency and stocks exchanges

3. Various of analyst Michael Hewson talking to a colleague then walking by

4. SOUNDBITE (English) Michael Hewson, Chief Market Analyst at CMC Markets:

"Theresa May, UK Prime Minister, basically told the markets that she intended to trigger article 50 of the Lisbon treaty by the end of Q1 2017 and that wasn't really a surprise. I think what was the surprise was the tone of her remarks. The tone of her remarks suggested she really wanted to take control of immigration and that has led markets to join the dots and essentially speculate on the fact that she could be looking for what is termed a hard Brexit, i.e. a pull out from the single market. And I think there's a perception that could cause a significant amount of disruption."

5. Cutaways of Hewson

6. SOUNDBITE (English) Michael Hewson, Chief Market Analyst at CMC Markets:

"I certainly think there's scope for further sterling (pound) weakness particularly against the dollar because there's an awful lot of speculations and the Federal Reserve may well raise interest rate in December so from that point of view the Federal Reserve is potentially on a hiking cycle so that could pressure the pound. Against the euro yes we could see potentially a little bit more weakness but Europe has problems all of its own, particularly in the banking sector. So I think the downside for Sterling against the euro could be far more limited than it is say against the US dollar."

7. Various of people working in the office

The pound continued to drop on Tuesday, falling another another 0.9 percent to 1.2250 US dollars.

A report in The Times newspaper on Tuesday, citing leaked papers from the Treasury department, said a so-called "hard Brexit" could lead to government tax revenues collapsing by 66 billion pounds (81 billion US dollars) a year and that the country's GDP could be 9.5 percent smaller if Britain leaves the single market and operates under standard World Trade Organisation rules.

The report helped put further pressure on the pound.

Add the uncertainty related to the Brexit negotiations and the Bank of England's policies, which could see interest rates cut further, and the outlook remains bleak for the pound.

While the pound's slide against the dollar has captured most of the headlines, especially last Friday when it plunged about 6 percent at one point to a new 31-year low of 1.1789 US dollars, the currency is posting equally dramatic declines against the euro, which is used by 19 EU countries.

One euro is now worth 0.90 pounds compared with around 0.76 pounds just prior to it becoming clear that Britain had voted for Brexit.

The irony of the pound's dramatic fall is that it will help British businesses secure their market share in the EU's single market, of which Britain is still a member until at least 2019, by making their goods more competitive.

Britain's top stock market index, the FTSE 100, struck a record high on Tuesday amid hopes that many of its constituent companies will benefit from the pound's slide.

Meanwhile Russia's state-owned VTB Bank is reportedly making plans to move a major investment banking hub out of London due to Britain's decision to leave the European Union.

VTB deputy president Herbert Moos told the Financial Times newspaper that London will cease to be VTB's European investment banking hub, saying "we did have bigger plans for the London office, but after Brexit we are scaling them down and building them up elsewhere."

The newspaper quoted Moos as saying that possible replacement locations include Frankfurt, Paris and Vienna, while some presence in London will be retained.

VTB's Moscow headquarters said in a statement that the "transfer or retention of the presence in London will depend on the scenario which Brexit follows."

VTB is Russia's second-largest bank and is under US and EU sanctions.

London - 11 October 2016

1. Various of brokers at CMC Market trading floor in the City of London

2. Various of screens showing live currency and stocks exchanges

3. Set up of Chief Market Analyst at CMC Markets, Michael Hewson, talking to a colleague

4. SOUNDBITE (English) Michael Hewson, Chief Market Analyst at CMC Markets:

"I think the concern is the speed of the decline. It did trade in a fairly tight rein of 1.30-1.35 (dollars to the pound). Since then the politics has got a little bit more problematic and I think that's what's driven the decline lower. Certainly since we've broken 1.30 the pace of the decline has accelerated somewhat. Obviously the difficult political situation is part of that. Other factors include a slightly stronger dollar and an anticipation of a US Fed rate rise, but certainly sentiment towards the pound is very bearish at the moment."

5. Cutaway GBP/USD electronic sign

6. SOUNDBITE (English) Michael Hewson, Chief Market Analyst at CMC Markets:

"I think it's still far to early to make any significant decisions about moving domicile or moving European headquarters. Brexit negotiations haven't even started yet. For VTB to move, that's a decision for them. Ultimately moving your domicile is very expensive so ultimately what any bank has to do, when it makes a decision like that, is to work out how much it's going to cost to move its staff, relative to the amount of money it can potentially save. There are still a whole host of matters that are completely unresolved."

7. CMC Market sign

8. Wide of street where VTB bank have their Europe headquarters

9. Mid of Russian and VTB bank flags

10. Pan down from Russian flag to VTB flag

11. Tilt up building to flags

12. VTB flag

The FTSE 100 was slightly up following the shock general election result on Friday morning, but the pound lost value against the both the dollar and euro.

The FSTE 100 was up 1.1 percent as markets opened and traders digested news that Theresa May's Conservatives have fallen short of an overall Commons majority.

London - 10 June 2017

1. Various of traders at IG

2. Various set ups of Chris Beauchamp, Chief Markets Analyst at IG Group

3. SOUNDBITE (English) Chris Beauchamp, Chief Markets Analyst at IG group:

"We certainly saw quite a reaction overnight once the exit poll came out and as the result has come through it's proven the exit poll to be correct with the pound dropping sharply against the dollar and the Euro. The FTSE 100 is slightly weaker overnight but it is actually rising in the wake of the open, basically when you see the currency weaken you see the FTSE 100 go up so it's a replay in miniature with what we had with the Brexit vote. I think it's the market worrying about the outlook for a hung parliament and clearly the Brexit negotiations which begin in 11 days but also those FTSE 100 companies now look a bit cheaper in dollar terms than they did just a few hours ago."

4. Cutaway

5. SOUNDBITE (English) Chris Beauchamp, Chief Markets Analyst at IG group:

"In the way the thinking runs is actually you might get much less of a hard Brexit in fact it might be the most modest of soft Brexits really with the UK looking to stay within the framework of the European Union with the single market, free movement of people sort of associate membership. It really has changed the terms of the negotiations at this point and does weaken the prime minister's hand to some extent but if it means UK's integration remains fairly high with the rest of Europe then the market's fairly happy with that."

6. Cutaway

7. SOUNDBITE (English) Chris Beauchamp, Chief Markets Analyst at IG group:

"Well it's certainly a matter of what happens over the next few weeks. If you look back to 2010 sterling dropped on the day and then continued to decline afterwards in the weeks after a hung parliament, that's because the negotiations dragged on a bit and it doesn't look like that will happen this time around so you might see the pound recovering a bit more ground as the day goes on."

8. Trading floor

UK pound sterling gained against the US dollar and the euro on Thursday morning, following the vote in the UK parliament to take a 'no deal' Brexit scenario off the table.

Michael Baker, a financial Analyst with ETX Capital, said that 'no deal' had been weighing heavily on the minds of investors and the rise in the value of sterling reflected their relief.

He added that investors now wanted an end to the uncertainty.

London - 14 March 2019

1. Set-up of Michael Baker, Financial Analyst at ETX Capital

2. Screen showing stock indexes

3. Close of Baker

4. SOUNDBITE (English) Michael Baker, Financial Analyst at ETX Capital:

"Well, we saw a degree of certainty last night with 'no deal' being taken off the table. Parliament once again has gone against government and decided that 'no deal' should not be an option. We've seen sterling naturally rally up as instability has now been taken out. We saw the pound go against the dollar, up to a nine-month high, against the euro up to twenty-month highs. Now it's kind of come off a little bit, now waiting for tonight's vote but generally quite a positive reaction with the hope now that it's (Article 50) going to be extended for a minimum of three months. Further options now looking to ratifiy a deal or possibly even more extreme efforts such as another referendum or a general election."

5. Analyst sitting at desk looking at multiple screens

6. Various of screens showing currency index

7. Wide of office

8. SOUNDBITE (English) Michael Baker, Financial Analyst with ETX Capital:

"It (no-deal scenario) has been weighing on it now for the last two or three years. It would be a leap into the unknown to leave without any sort of trade agreements and the fear of what could happen on the border between Ireland and Northern Ireland, so it's been weighing on it quite heavily, so what's why you've seen quite a reaction last night, it was a two percent move up against the dollar when the actual no deal was announced, so you can just see that investors who drive the pound were happy with that scenario."

9. Various of office, analysts looking at screens

10. SOUNDBITE (English) Michael Baker, Financial Analyst with ETX Capital:

"They (investors) are looking for a deal, they're looking for a stability, they're looking for all of this to be put behind us now. It's been going on for a long time now, as you speak to a lot of guys, a lot of businesses, it's kind of wearing thin on them as well. They want an outcome, they want a deal put in place so we don't have this limbo because investment is drying up. It's been tough, it's been tough for them and they want the best outcome now."

11. Wide of office block