May's Brexit woes send Sterling spiralling

The British Pound weakened against major currency on November 15, 2018.
The British Pound weakened against major currency on November 15, 2018. Copyright REUTERS/Benoit Tessier/File Photo
Copyright REUTERS/Benoit Tessier/File Photo
By Alice Tidey
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The British currency is on track to record its biggest one-day drop in over a year on Thursday.


The British pound was on track for its biggest one-day loss in over a year on Thursday after two ministers quit Prime Minister Theresa May's Cabinet, fuelling rumours of a leadership challenge and adding to the uncertainty over the survival of the draft Brexit deal.

Sterling's dive against the euro and US dollar started shortly after Brexit Secretary Dominic Raab announced his resignation just before 10 a.m. CET. Work & Pensions Secretary Esther McVey followed an hour later.

By 1 p.m. CET, the pound had fallen 1.5% against the euro to €1,1317, while it had dropped from above $1.30 to $1.28.

The plunge was spurred by fears that May would be unable to get the draft Brexit deal approved by Parliament resulting in the UK crashing out of the European Union on March 29, 2019 without a deal.

Analysts recalibrated their expectations with some forecasting that the pound could weaken much further in the weeks and months to come.

A weaker pound makes it more expensive for Brits to import products from abroad.

Here is how that compares to other key Brexit moments:

June 24, 2016: The pound starts to tumble precipitously when the Leave vote starts pulling ahead in the Brexit referendum. By the end of the European day, the British currency had lost 8% of its value against the dollar and more than 5% against the euro to close under $1.40 for the first time since the mid-1980s in its biggest one-day drops in history.

March 29, 2017: The UK delivers a letter triggering Article 50 — and two years of Brexit negotiations — to the European Commission in the early afternoon. The pound, which had lost about 15% of its value against the dollar since the referendum, ends the European day some 0.3% lower against the dollar at just above $1.24. However, it rose more than 0.2% against the euro to above €1.15.

June 9, 2017: The ruling Conservative Party loses its parliamentary majority in snap elections called by Prime Minister Theresa May. The pound, which had started to plummet after exit polls revealed late on June 8 that no party would have a majority, stabilised during the day but still ended up shaving 1.6% of its worth against the dollar to just above $1.27.

December 13, 2017: May's government is defeated by parliament after rebels in her party side with the opposition to back an amendment to the divorce bill that would guarantee parliament gets to vote on the final Brexit deal. Traders appear not to know what to make of it and the pound remains relatively stable at around $1.34.

March 19, 2018: The pound surges against the dollar and euro after a 21-month transition period is announced. During the course of the day it rises as much as 1% against the dollar and 0.8% against the euro before easing back a little bit. By 5 p.m. CET, the pound is worth slightly above $1.40.

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