The pound fell off a cliff in early trade and is back at 30-year lows

LONDON - Sterling has suffered its biggest fall since October's "flash crash" after reports over the weekend that Theresa May is willing to give up the European Single Market and the EEA customs union as part of Brexit agreements.

The pound opened down 1% against the dollar in Asian trade and is still hovering close to levels not seen since 1985. The pound is down 1.25% to $1.2022 at 7.06 a.m. GMT (2.06 a.m. ET).

Sterling is also slumping against the euro, down 1.23% to €1.1319 at the time of writing.

The slump follows newspaper reports over the weekend suggesting that Theresa May will this week announce a willingness to pursue the hardest of so-called "hard Brexits," sacrificing Britain's membership of the EU single market and the customs union in favour of regaining control over immigration.

Michael Hewson, chief market analyst at CMC Markets, says in an email sent early Monday morning: "The expectation is that the Prime Minister's insistence on being able to better control immigration as well as the UK's law making, will result in the UK announcing its intention to leave the single market and customs union, which most investors appear to assign as being exceedingly negative for the pound."

May will set out her vision for Brexit in a speech on Tuesday at London's Lancaster House. Bloomberg reported that the Treasury is expecting a further negative market reaction to the full speech and is preparing to meet with leading banks to explain the policies in more detail, in a bid to calm the possible reaction.