The pound is back below $1.22 as the recovery runs out of steam

Sterling's revival against the dollar is collapsing fast, with the markets spooked by the hard stance of a key Brexit minister.

The pound was up over 1% against the dollar for much of Wednesday but began collapsing around 1.30 p.m. BST (8.30 a.m. ET). Here is how it looks just after 2.00 p.m. BST (9.00 a.m. ET):

The collapse coincides with David Davis, the Secretary of State for Exiting Europe, answering questions on the government's Brexit strategy in Parliament.

Sterling initially rallied after prime minister Theresa May agreed to debate the triggering of Article 50, which begins the official Brexit process, in parliament. Traders hoped that signalled a more conciliatory stance.

But Davis is taking a hard stance on the questioning and reiterating that control over immigration is the top priority in negotiations.

This means Britain will likely reject freedom of movement. If the UK gives up freedom of movement, then the EU will likely take away access to the single market and financial passporting rights. Leaked Treasury papers this week suggested leaving the single market could cost the UK £66 billion ($80.4 billion) in lost tax revenues.

Hence, the pound's slump.

Sterling's rally against the euro is also fading.