- Pound Weakens as U.K. Government May Lose Another Minister
The pound fell for the second day against the dollar as U.K. Prime Minister Theresa May looked set to lose a second member of her cabinet within a week.
Sterling dropped against all of its Group-of-10 peers as newspapers reported that May was preparing to fire International Development Secretary Priti Patel, who held several unauthorized meetings with Israeli officials while on holiday. The prime minister already lost one top minister this week when Defense Secretary Michael Fallon quit in a sexual harassment scandal, adding to the government’s troubles as it struggles to make a breakthrough in Brexit talks.
The political turmoil could “perhaps see us back to $1.31 in cable and above yesterday’s high in euro-sterling,” said Jordan Rochester, a currency strategist at Nomura International Plc. “A lot will rest on any signs of progress on Friday in the Brexit talks and how the political scandal will go before a significant rally can get underway.”
The Conservative government has a working majority of just 13 after the election earlier this year saw it lose seats. The prime minister is also vulnerable to further calls for her to step down, after a disastrous party conference speech last month saw up to 30 lawmakers reportedly sign a motion for her resignation.
The pound fell 0.4 percent to $1.3120 as of 10:46 a.m. in London, extending Tuesday’s losses that followed disappointing retail-sales data. Sterling weakened 0.4 percent to 88.39 pence per euro. The yield on U.K. 10-year government bonds declined 2 basis points to 1.21 percent.