The pound has suffered its longest losing streak against the euro since the creation of the single currency two decades ago as turmoil in Downing Street spilled over into the world’s currency markets.
Speculation that Theresa May’s premiership was coming to an end following her failure to win support for her Brexit deal saw sterling drop for a 13th day in a row against the euro.
With events at Westminster conjuring up memories of the fall of Margaret Thatcher in 1990, the pound fell as low as €1.1313 against the euro, its weakest level for three months.
Reports that cabinet ministers including home secretary Sajid Javid and defence secretary Penny Mordaunt had asked to see the prime minister only served to reinforce the belief in the City that May’s time in office was up.
Fears that her replacement as prime minister would be prepared to go for a no-deal Brexit led to currency traders shunning the pound, which slid to $1.2625 against the US dollar – its lowest level since early January.
Sterling has fallen nearly four cents against the US dollar since the start of May, and is on course for its worst performance against the dollar since May floated the idea of a hard Brexit at the Conservative party conference in October 2016.
Shares in companies seen as particularly vulnerable to a no-deal Brexit led the fallers on the London stock market, with housebuilder Persimmon falling more than 5% and budget airline easyJet losing 6%. The FTSE 100, which contains a large number of companies that benefit from a weak pound due to earnings made overseas, was up five points at 7334 points.
Neil Wilson of Markets.com, said of the political uncertainty: “For the market, this opens up the prospect of more uncertainty, the potential of a Brexiter PM, a general election and perhaps a second referendum. In other words, it just makes things even more chaotic.
“However, we should caution that a ‘sell the rumour, buy the fact’ trade may well be at work – as soon as things become clearer, sterling is ripe for a bounce. The more it’s sold, the riper it becomes, as the trade looks increasingly crowded.”
John Goldie, FX Dealer at Argentex, said: “Historically, we are at significantly low levels and have been since the referendum. In the short term, risks remain for the pound and are unlikely to go away any time soon.”
• This article was amended on 24 May 2019. The FTSE 100 was up five points at 7334, rather than down five points, as stated in an earlier version.
