(MENAFN- AFP) The pound fell sharply Thursday as a string of British government resignations put Prime Minister Theresa May and her draft Brexit deal in serious jeopardy, dealers said.
News that May was to give a press conference at 1700 GMT added to the jitters, coming after the prime minister spent several hours in Parliament defending the agreement from attack on all sides, with very few voices offering support.
The UK currency was badly hit from early in the day as a series of ministers, including Brexit secretary Dominic Raab, quit in protest, undercutting the cautious optimism generated by May's announcement late Wednesday that she had won the cabinet's backing.
May held firm, however, telling the house it was the best deal on offer, but it looked increasingly likely she could soon face a leadership challenge after leading Brexiteer MP Jacob Rees-Mogg formally called for a vote of no confidence.
The pound lost around two percent against the dollar to trade at $1.2774.
It fell by about the same against the euro.
"The performance of the pound seems to perfectly reflect the mood in parliament and everywhere else right now. Even the weather is grey and gloomy," Oanda analyst Craig Erlam told AFP.
"This departure (of Raab) could put at risk the Brexit deal and traders are selling the British currency due to growing uncertainty about the future of the UK," said ActivTrades analyst Carlo Alberto De Casa.
- 'Dead duck' -
"The pound is under heavy pressure... as the UK-EU deal begins to look like a dead duck," noted IG analyst Chris Beauchamp.
"As the steady drip of resignations hits the government, the UK's deal with the EU appears to be dead in the water already."
S & P Global Ratings said May's draft accord "represents material progress in negotiations" but it was uncertain if Parliament would approve it.
"In our base case, we continue to anticipate an orderly withdrawal of the UK from the EU," it said, while the latest developments provided no immediate reason to change its UK ratings.
- London stock gains fade -
There was some early support for London stocks as the weaker pound benefits the major exporters on the FTSE-100 index but the market then reversed direction as the political crisis deepened in the afternoon to finish little changed on the day.
Elsewhere in Europe, the stock main markets were weaker, undercut by the uncertainty surrounding Brexit and Italy's fiscal troubles.
In the US, the DJIA was down 0.25 percent at around 1650 GMT, with S & P 500 little changed and the NASDAQ up 0.41 percent.
Asian equities mostly rose Thursday, with Hong Kong and Shanghai rallying on hopes for an easing of the China-US trade war, while energy firms also enjoyed a much-needed bounce as oil prices stabilised.
- Key figures around 1700 GMT -
Pound/dollar: DOWN at $1.2774 from $1.2977 Wednesday at 2200 GMT
Euro/pound: UP at 88.00 pence from 87.05 pence
Euro/dollar: UP at $1.1334 from $1.1310
Dollar/yen: DOWN at 113.433 yen from 113.63 yen
London - FTSE 100: UP 0.06 percent at 7,038.01 points (close)
Frankfurt - DAX 30: DOWN 0.52 percent at 11,353.67 (close)
Paris - CAC 40: DOWN 0.70 percent at 5,033.62 (close)
New York - Dow: DOWN 0.25 percent at 25,017.76
Tokyo - Nikkei 225: DOWN 0.2 percent at 21,803.62 (close)
Hong Kong - Hang Seng: UP 1.8 percent at 26,103.34 (close)
Shanghai - Composite: UP 1.4 percent at 2,668.17 (close)
Oil - Brent Crude: UP $1.10 cents at $67.20 per barrel
Oil - West Texas Intermediate: UP 86 cents at $57.11
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