U.K. Pound Falls Sharply Amid Reports of No Confidence Challenge Against PM May
The U.K. pound fell sharply against the U.S. dollar overnight after a report from Britain’s Sunday Times newspaper suggested Conservative party lawmakers were preparing a leadership challenge against Prime Minister Theresa May.
The Sunday Times newspaper said as many as 40 Conservative MPs signed a letter of “no confidence” against the Prime Minster, a number that falls just 8 shy of the minimum needed to launch a formal leadership challenge within the party. The move follows a series of mis-steps from May, including the resignation of two cabinet members and stalled Brexit talks, that have caused many to question her ability to lead a fractured party — and government — as negotiations to leave the European Union move toward the next crucial phase.
“We are profoundly worried that in some parts of government the current preparations are not proceeding with anything like sufficient energy,” the letter stated, according to the paper. “We have heard it argued by some that we cannot start preparations on the basis of ‘No Deal’ because that would undermine our obligation of ‘sincere cooperation’ with the EU. If taken seriously, that would leave us over a barrel in 2021.”
The pound was marked 0.95% lower from Friday’s close in early London trading to change hands at a near one-month low of 1.3065.
May has also faced criticism from within her party — and beyond — for her failure to reign-in Boris Johnson, Britain’s outspoken Foreign Minister who many suggest in undermining the Prime Minister in order to accelerate his ascension to Number 10.
Johnson, who led portions of the campaign to leave the European Union in the run-up to Britain’s Brexit referendum, was also suspected of pressuring May to move more towards a “hard Brexit” negotiating stance ahead of a key parliamentary vote this week.
The pressure on May, if it were to intensify further, could result in a leadership challenge that would either oust the Prime Minister in favor of a leader who would then push for a quicker, more decisive exit from the EU, or trigger another national election that could see the Conservative’s slim electoral edge disappear completely in favor of a Labor government that many suggest would increase corporate and individual tax rates and move to nationalise certain sectors of the U.K. economy.