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Pound falls sharply after string of British MPs resign amid Brexit chaos

The UK currency was pummelled as a number of ministers quit earlier today.

Image: Screengrab via Sky News

THE POUND HAS fallen sharply as a string of British government resignations appeared to put Prime Minister Theresa May and her draft Brexit deal in serious jeopardy, dealers said.

The UK currency was pummelled as a number of ministers, including Brexit secretary Dominic Raab, quit in protest against the EU exit deal which was mauled by all sides in Parliament.

May held firm, telling the house it was the best deal on offer, but it looked increasingly likely she could soon face a leadership challenge after leading Brexiteer MP Jacob Rees-Mogg formally called for a vote of no confidence.

The pound plunged more than 1.5% against the dollar to a one-month low at $1.2777 and was trading around $1.28 in mid-afternoon.

It fell by about the same amount against the euro.

“The performance of the pound seems to perfectly reflect the mood in parliament and everywhere else right now. Even the weather is grey and gloomy,” Oanda analyst Craig Erlam told AFP.

“This departure (of Raab) could put at risk the Brexit deal and traders are selling the British currency due to growing uncertainty about the future of the UK,” said ActivTrades analyst Carlo Alberto De Casa.

‘Dead duck’

“The pound is under heavy pressure… as the UK-EU deal begins to look like a dead duck,” noted IG analyst Chris Beauchamp.

“As the steady drip of resignations hits the government, the UK’s deal with the EU appears to be dead in the water already.”

The pound was also hit by news that retail sales slid 0.5% in October compared with September.

There was some early support for London stocks as the weaker currency benefits the major exporters on the FTSE-100 index but the market then reversed direction as the political crisis deepened in the afternoon.

Elsewhere in Europe, the stock main markets were all in the red, undercut by the uncertainty surrounding Brexit and Italy’s fiscal troubles.

In the US, New York was down 0.5% in early trade, as was the S&P 500, while the NASDAQ was little changed.

Asian equities mostly rose today, with Hong Kong and Shanghai rallying on hopes for an easing of the China-US trade war, while energy firms also enjoyed a much-needed bounce as oil prices stabilised.

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Elsewhere, bitcoin extended sharp falls to below $5,400 as the crypto markets continued volatile.

© AFP 2018 

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