Sterling is slipping again on Monday morning, putting to bed any hopes of a bounce for the pound.
Here is how the pound looks against the dollar at around 7.10 a.m. BST (2.10 a.m. ET):
And here is how sterling looks against the euro at the same time:
The fall is once again political, with bad Brexit headlines hitting the two pairings.
Kathleen Brooks, research director at spread betting company City Index, says in an emailed statement: “Part of the decline is down to negative political headlines: fears of a second Scottish referendum are building, and some UK newspapers reported on Sunday that the UK Chancellor could quit his post after he was excluded from government meetings because he criticised the “hard” Brexit stance of the Prime Minister.”
The Daily Telegraph reported on Sunday that Chancellor Philip Hammond was involved in a cabinet row over reportedly trying to “undermine Brexit,” by trying to slow its progress. However, Hammond’s Treasury allies have briefed the BBC that this is “rubbish.”
Brooks says: “Although the Treasury has denied that Hammond will quit his post, it doesn’t help to instill confidence in the pound. GBP is down more than 5% so far this month vs. the USD; it is also weaker against every other G10 currency.
“To put this month’s fall into context, the pound is weaker against the majority of emerging market currencies, including the resurgent Mexican peso, and the Malaysian ringgit. The South African rand managed to eek out a gain vs. the pound, even though its finance minister was recently hit with charges of criminal misconduct. In fact, the pound is starting to act like an emerging market currency, with volatile price swings, and no stabiliser to limit the selling pressure.”
Both Morgan Stanley and Citi argued that Britain is becoming an emerging market in notes on Friday, while HSBC has argued that the pound is now a political football that currency traders are using as a proxy vote for possible Brexit policies.
Here is the pounds collapse against the dollar over the last two weeks: