Pound falls as Brexit uncertainty rises
LONDON (BBC News): The pound has fallen against the dollar amid political uncertainty as Prime Minister Theresa May struggles to broker an agreement on Brexit with her cabinet.
In early trading, sterling fell nearly 1% against the dollar to $1.2845. Against the euro, it was down 0.2% at €1.1422. Analysts said the fall was partly a reaction to the latest news concerning Brexit talks, but also reflected a stronger dollar.
Mrs May is trying to rally support among cabinet ministers for her Brexit proposal in time for a hoped-for summit in Brussels later this month.
However, media reports suggest that her efforts have been delayed by increasing disarray in her cabinet over the issue. On Friday, Transport Minister Jo Johnson became the latest government figure to quit his post over Brexit, arguing that UK was “on the brink of the greatest crisis” since World War Two.
Simon Derrick, head of currency research at Bank of New York Mellon, said the pound’s drop was “obviously related to the uncertainty over the weekend”, but noted that sterling had largely “held its own” against the euro.
He told the BBC: “At least half of it is actually about dollar strength and the expectation that the Federal Reserve will hike interest rates in December.”
Connor Campbell, financial analyst at Spreadex, said: “Sterling’s early November rebound continued to unravel on Monday, the currency coming down with a nasty case of the Brexit blues.
“With her most ardent anti-EU MPs opposed to her customs arrangement plans, and a potential Remain rebellion brewing following the resignation of Jo Johnson, Theresa May appears to have been forced to abandon the emergency cabinet meeting that was pencilled in, after a supposed breakthrough last week.”