The pound is tumbling against the dollar and the euro: Here's why

 
Emma Haslett
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The pound dived against a basket of currencies as Theresa May's woes built up. (Source: Getty)

The pound tumbled against both the dollar and the euro in the early hours of today after a catalogue of woes hit the Prime Minister over the weekend.

Sterling was 0.9 per cent lower against the dollar in early trading in London, at $1.3083, and 0.6 per cent lower against the euro, at €1.1239.

Yesterday The Sunday Times reported that 40 MPs had agreed to sign a letter of no confidence against Theresa May as Brexit negotiations became increasingly fraught.

Read more: Theresa May to meet EU business bosses in Brexit charm offensive

Sterling's manic Monday
Dollar -0.9% Euro -6%
Swiss Franc -0.7% Japanese yen -0.9%

"There’s a lot for May to fret about at the moment," said Connor Campbell, financial analyst at SpreadEx. "She could be facing defeat on part of her Brexit Bill later in the week, with Tory Remainers likely to team up with Labour to try and secure Parliament a meaningful vote on any deal with the EU, something the PM is keen to avoid."

"There’s also threats from Michel Barnier – who stated at the weekend the EU was preparing for a ‘no deal’ scenario – that if Britain doesn’t spell out how far it intends to ‘honour its obligations’ within the next two weeks then any trade talks will have to be ‘put back’.

"Finally, there’s the leaked ‘Orwellian’ letter from Michael Gove and Boris Johnson – back to scheming after last year’s Tory leadership falling out – to May, with the prominent Leaver MPs outlining a series of secret Brexit demands."

Ipek Ozkardeskaya, senior market analyst at London Capital Group, said businesses were beginning to lose patience in the Prime Minister.

"Businesses and banks are increasingly impatient and worried. Investors are leaving the pound due to the chaotic political environment inside and outside the UK."

She added that all eyes will be on inflation figures on Tuesday.

"The UK’s headline consumer prices index may have advanced to 3.1 per cent year-on-year in October from 3.0 per cent printed a month earlier."

Read more: It turns out public support for Theresa May is actually rising

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