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Speaking to Sky News, May indicated that she will push ahead with a "Hard Brexit" by stating the UK will not be looking to hang onto "bits of EU membership".
She went on to say that: "We are leaving. We are coming out. We are not going to be a member of the EU any longer. We will be able to have control of our borders, control of our laws".
Her comments have shattered investor confidence and have caused the pound fall across the board, with the GBP/USD cross dropping to $1.2128 during the early part of this mornings session.
GBP/USD graph.
Since the beginning of November, the pound had been clawing back some of the ground it had lost after Britain voted to leave the European Union. Talk of a transitional deal and a softer approach to negotiations had boosted investors' confidence, and saw the GBP/USD cross rise to $1.2713 by the middle of December.
However, in the space of three weeks sterling has lost nearly 4.5 per cent against the dollar and after May comments yesterday, I think it will be difficult for the pound to recover in the short-term.
We are now in touching distance of the levels we witnessed during the flash crash in October and we could easily see the GBP/USD cross test the $1.20 barrier in the coming weeks.
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