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Pound sell-off strengthens amid plot against May

Pound continues to fall as investors fear Tory leadership contest after Grant Shapps emerges as ringleader of plot against PM.

Pound sell-off strengthens amid plot against May

The pound has continued to fall amid fears of political instability, as former Conservative party chairman Grant Shapps emerged as the ringleader of a plot to oust prime minister Theresa May.

Sterling fell 0.6% to $1.303 against the dollar, while the euro rose 0.5% against the pound to trade at 89.7p.

Shapps told The Times: 'I think having lost an election the party must look for a new leader to take us forward'.

The pound briefly pared losses in the early afternoon, after May hit back at plotters, saying she would provide 'calm leadership'.

But the respite for sterling was only temporary, and the currency is now heading for a 2.7% fall against the dollar over the last week.

Traders have been hit by jitters over May's ability to cling on as prime minister, after a poorly-received speech at the Conservative party conference earlier this week.

Kathleen Brooks, research director at City Index, said markets were already pricing in May's resignation and her replacement by a Brexiteer.

'The strength of the downside momentum in sterling suggests that the pound's bloodbath has further to run,' she said.

'We have sliced through so many support levels this week that we don't even think $1.30 is likely to hold at this stage.'

Oliver Harvey, macro strategist at Deutsche Bank, said investors feared a Tory party leadership contest's 'potential to derail Brexit negotiations as they reach a critical juncture and create additional stress for markets'.

He said worst outcome for markets would be a full leadership contest, triggered by at least 47 Conservative MPs expressing no confidence in May.

'The market implications are quite negative,' he said. 'First, based on recent precedent, the contest would take around two months to conclude, putting on hold Brexit negotiations at a critical juncture.

'Second, to appeal to the Conservative party membership, it is likely that the successful candidate fights on a hard Brexit platform, which could undermine market confidence.'

Harvey argued an orderly transition was more probable, with MPs already united behind a replacement, which could prove better received by markets. However, he said May remaining as PM was still the most likely outcome.

Viraj Patel, foreign exchange strategist at ING, said a Tory leadership contest 'could see the pound getting quickly dumped, with short speculative positions being rebuilt'.

'First and foremost it would pose major doubts over a Number Bank of England rate hike, which markets are all but pricing in at this stage, while it could dampen some of the recent cyclical upside seen in the UK data, especially the forward-looking indicators.'

The pound's fall helped the FTSE 100 edge 12 points higher to 7,520. A weaker pound tends to support the index, whose members rely on overseas markets for around three-quarters of their revenues.

36 comments so far. Why not have your say?

Duncan jones

Oct 06, 2017 at 17:37

It may be an inconvenient truth but......what Shapps is saying is true .Better a change of leader than a change of government. The latter a growing threat while the former is delayed. Hammond or Davis are the cognoscenti's choice but BJ and Amber Rudd have their followers. A reinvigorated government could soon put negotiations back on track. I wonder what DC is making of all this?!!

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Donald Chan

Oct 06, 2017 at 18:36

Nice of you to ask but I'm just watching for the moment.

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Roger Ellis via mobile

Oct 06, 2017 at 18:46

Ides of march, it's happening. Who to replace T.May ? Worst bunch of self interested Tories we've seen for years. Brexit negotiations will be very badly affected and then recession and plague of public sector strikes. Labour elected, run on the pound, inflation takes off. Capital flight outlawed, public sector pay rises funded by ever higher tax hikes, inflation ingrained, nationalisation aplenty, productivity continually falling, property falling dramatically,the begging bowl is out to the IMF, pound lower than one dollar, 65euro cents to the pound. Any bets?

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an elder one

Oct 06, 2017 at 18:52

If it becomes the case; Davis for caretaker and Boris for EU negotiator; the rest are relatively unknowns. Should liven things up; though we need substantial plans and assets in place to leave without a deal.

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an elder one

Oct 06, 2017 at 19:28

I don't rate Hammond he's something of a bean-counter and not a brexit believer at all. We need some vitality and enthusiasm for the job at the top, with a good team to do the donkey work. We've been here before. May is out of her league, unfortunately.

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Adrian K via mobile

Oct 06, 2017 at 19:32

Despite Theresa May’s perceived shortcomings there are two major problems for the Conservatives. They seem to lack (or are unable to enunciate) a consistent message to offer the electorate and it is difficult to see anyone (including Boris or Davis) with sufficient gravitas or charisma to replace May.

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Hopeless romantic

Oct 06, 2017 at 22:27

Time to dump the whole Brexit business.

If legitimacy is required, simply hold a new referendum to confirm "the will of the people".

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Andy Bear

Oct 06, 2017 at 22:38

Commentators all seem to be debating what's happening in the Tory Party while the biggest disaster to hit the UK since WWII rolls on unabated. Reminds me of those little animals that jump off cliffs!

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Hopeless romantic

Oct 06, 2017 at 22:46

The fact that clowns, showmen and incompetents are being promoted as replacements leaders of the Tories suggests they need some time in the country to sort themselves out

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Donald Chan

Oct 07, 2017 at 08:42

The anti-Brexiteers re now weighing in. Article 50 has been triggerede, the Repeal Bill has passed. We are to exit the EU May 2019. There should be an end to the undermining of the UK in its negotiations with the EU. The EU is determined to make this negotiation difficult for political reasons. This was to be anticipated. We should proceed on the basis that we are a strong trading nation and are prepared to exit and subsribe to WTO rules if the EU are not prepared to co-operate.

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Mark Stringer

Oct 07, 2017 at 10:41

Schapps/Green, now there is a face just crying out for a damned good punch.

It's all egos and arseh*les anyway on our side and especially the EU's.

Egos and self interest first then whatever the media is rattling on about next.

The very last thing this country really wants is a strong unequivocal leader except when it suits the Sunday supplement of whichever hack needs to fill a page.

Imagine the neurotics in what is laughingly referred to as "the city" and the EU clerks if May actually turned around and said here's the line now put up or shut up.

The known knowns consists of the unelected EU clerks making life as difficult as possible to stop others holding their own leave vote. No matter what compromise we attempt to make the EU clerks will still enjoy massive perks, pay and pensions unlike tariff ridden goods and services companies who may catch a cold. They will make each demand more onerous; they do not need to go to the polls to keep their jobs nor face the other egos within their own party sniping all the time.

We face constant snide comments from the EU clerks; imagine if Alan Clark (if alive) or Eric Joyce were on the team!

May knows the egos want her job and it suits plenty of rabble rousers as well. She should tell the EU what we are prepared to offer and leave the ball in their court and if necessary default to wto as we really are getting nowhere which us where the EU wants us.

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Stephen B.

Oct 07, 2017 at 11:31

"He said worst outcome for markets would be a full leadership contest, triggered by at least 47 Conservative MPs expressing no confidence in May."

That's factually incorrect. 47 MPs can trigger a full confidence vote, but she only has to resign if she doesn't get a majority in that vote - although she would probably go if it was just a bare majority. Still it doesn't currently look as though she would lose it. There's only a leadership contest if she resigns (in which case she can't stand again).

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an elder one

Oct 07, 2017 at 11:40

Mark, I'd agree with most of what you say, especially a smack in the teeth for a good few,.Schapps et al, but May needs to buck up her ideas and get out of the vicarage

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Mark Stringer

Oct 07, 2017 at 11:48

an elder one, yes,agreed she does especially if she is going to stay, which it looks as if she will.

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an elder one

Oct 07, 2017 at 14:11

Mark, there are too many do-gooder career kids in the Tory party today, a sort of Lib dem tendency, will we ever see the likes of Enoch Powell again; one I admired considerably, but then I'm an old b,,,,,,r and beyond the pail.

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Donald Chan

Oct 07, 2017 at 14:41

Mark Stringer

Oct 07, 2017 at 16:31

an elder one, yes, plain speaking is virtually a crime now. Powell, not perfect, has been much maligned for political expediency.

Too many tails have been allowed to wag the nation dog which has achieved nothing of any substance except for the rise of the metropolitan ponce.

There is no longer anything or anyone who binds us as a nation with a common goal.

We don’t even have an army that can be officially classified as such.

I’m certainly glad I’m 60 and not 16 and in my opinion seen the best of times, but will shuffle off this mortal coil in the worst.

I liken society to my years in the RAF where we had commonwealth service personnel including turbaned Sikhs. What bound us all, we were all Air Force through and through with a common interest, the nation of RAF.

The civil servants have also destroyed that.

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an elder one

Oct 07, 2017 at 19:38

Donald; pail, as in bucket, a cylindrical or cone shaped container with a looped over handle for carrying stuff; pale as in wan. I envisaged the former.

Mark, it gets worse as you get older; I was of nine years at outbreak of WW2 did 2 years national service in REME in 52. The nation seems to have lost its backbone as evidenced by our governance, present and potential; Corbyn intends to go the whole hog.

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an elder one

Oct 07, 2017 at 19:54

As for Brexit, I reckon it will get nowhere in round the table negotiation; we are trying to deal with two intractable entities; Germany, a nation of semi autonomous lander, ruled by strict regulation, and France, who dwell in a sort of fairyland with conceits of fine cuisine and unchanging agriculture, forever squabbling with each other - that involved us in two world wars.

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Donald Chan

Oct 07, 2017 at 20:20

I'm glad you are beyond the bucket, elder one. However, you may lke to check the origin of the expression.

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an elder one

Oct 07, 2017 at 20:41

Donald had I used pale, it would have denoted personal indecency; not my intention. However I accept your point; the common expression is pale related to paling as in fence. There is a rough equivalence twixt the two; both can denote out of bounds.

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Mark Stringer

Oct 07, 2017 at 20:45

an elder one, yes, the EU origins were to stop the Germans marching into France again.

The issue with the main EU protagonists France, Holland, Belgium and latterly the Scandinavians are that they see consensus style politics or rolling over with your feet in the air as quite normal. Spain and the Slavs only wanted their infrastructure rebuilt by the EU taxpayer.

Now good old Merkel with her loans to Ukraine so they can buy VW cars, Neff ovens and BMW’s wants NATO shake its puny fist at Putin. Still, her chickens have come home to roost! It has been suggested that she would have eased the Brexit bottleneck . We’ll never know though.

I served in Germany and can tell you that there are as many slackers there as we have here, especially when employed by the Brit military.

What gets me is that we still have the heritage of entrepreneurship which we waste daily due to shortermism.

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jon d

Oct 07, 2017 at 21:39

We are all witnessing machinations resulting from the idiotic idea to believe that the 52:48 split decision referendum result actually warranted a decision to leave the EU. We will be outside the tent looking in and will inevitably have to watch the slow growth of a nearby power bloc in the world without being able to influence it in the least. For many years our MEPs should have been being diplomats and effecting change from the inside. Our pity is that we are so used to confrontational politics at home that we try and carry them out at the supranational level where we don't have the clout, and we end up being laughed at my a huge majority of well educated people here and abroad. Many politicians know this but they are too afraid to say so. You wait and see!

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jon d

Oct 07, 2017 at 21:41

We have thrown away the chance to be a leading nation in Europe. Mr Putin absolutely loves this.

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Mark Stringer

Oct 07, 2017 at 22:02

Jon d, we’re witnessing the frightened dogs crawling away with their tails firmly between their legs because they are worried well about the loss of unrestricted holidays in Europe, cheaper wine and back packing rail Europe wallahs.

When the crash happens wake me up will you.

I can still buy a bmw, vow, French wine, British beer, my lights work, my bank balance remains in the black and because I don’t live beyond my means I can go on holiday whenever I want.

FYI, we have been on the sidelines for decades. We weren’t wanted from the outset.

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Oct 07, 2017 at 22:14

Mark for PM :)

with Chancellor elder one and Donald, Foreign Sec

No place for me I fear, not pc to look Junkers in the eye and leave him in no doubt about what is fair - but I do believe Jacob R-M could (look at his cv, a successful straight talking investment banker. Of course the far left would cringe but centrist Labour would perhaps be relieved to see an intelligent leader unafraid of what the lilly-livered, unproductive, short sighted, hangers on may think.

Corbyn, MacDonald et al might just stop their political point scoring and the EU Brexit team might well stop their threats and bullying.

Where has the patriotism our generation so value gone !

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Mark Stringer

Oct 07, 2017 at 22:47

CT, I hope that’s not post mortem😀(pm).

The wealthy liberal elite has stolen our patriotism. The ones who can afford to live anywhere the mess they created isn’t.

I recall my oldest two children’s education and what I would call traditional. The youngest two you could tell there was already a move away from our history,religion and traditions and the creep of “common purpose” started.

Let’s be honest between the homogenised metropolitan ponce and the EU sycophant it is all about chasing the credit card,leased car and mortgage payment none which they will be able to afford when they are too knackered to work. I suppose for them the EU looks like a sweet shop to a kid.

Don’t get me wrong, the idea of trading EU or EEC as it was without the 1000 plus EU clerks with delusions of grandeur on Europe’s taxes is great but the creep of federalism with a kraut or marshal petain type at it’s head is horrifying. The EU makes no secret that’s where they want it. integrated tax, military, policy at all levels, with Germany and its yapping poodle France at the head.

I wonder how the EU sycophants and anti Brexiters explain why we are still the destination of choice for so called execs, immigrants and takeovers.

It must be neurosis on steroids when they stand in front of the cheese counter and imagine all that continental cheese disappearing after Brexit😀😀

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Liz H

Oct 08, 2017 at 13:37

Donald, we value your opinion, but Brexit not bucket is the topic of the forum.

Nice reply, Mark😀

I agree with you. The younger generation seem to be fearful of life outside the EU because they know of nothing else.

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Donald Chan

Oct 08, 2017 at 14:10

Liz H, I agree we went off topic indulging in semantics (not at my instigation). The EU is a political institution by stealth. The trade agreenments are part of the package. I would probaly be qualified to be FS (having had involvement in negotiations around the world - and I still maintain my connections across the continents) but I no longer have the energy. My own sense of history means I proclaim the benefits of Brexit for my children's future. This is why I am disturbed by the younger generation's lack of understandiing of national interest.

. .

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Mark Stringer

Oct 08, 2017 at 14:11

Liz H, it is a great pity as I know many young people especially when I worked with graduates who are clearly talented, but yes, they know nothing else and it is disheartening.

I don’t want there to be a yawning chasm between my own children, the wider population under 40 and myself.

If only they knew what Edward Heath lied about to get us into the EEC and how it all started out ok even with France attempting to keep us out.

I cite my daughter; an Oxford bio chem graduate. Bright as a button academically but thick as two short planks as far as our own modern history and our history with the EEC/EU goes yet she is a EU cheerleader through and through.

One son, a medical Dr sees himself as fluid when it comes to nationality and would be as happy to up sticks and go to America,Australia,NZ, Canada or other. Only one thing keeps him here for now, a social conscience.

I’ve lived and worked in a number of European countries both inside the military and also as a civilian and most are just like us underneath the politics.

We all have far more in common without the politics and would still thrive with just trade.

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Mark Stringer

Oct 08, 2017 at 14:20

Donald Chan, yes, they seem to identify as smaller social groups. I cite my daughter who lives in London. She talks about areas now in terms of Essex boys, hipsters, fashionistas..........when I grew up in London it was quite different.

We all had similar experiences, well most, youth clubs, football leagues, Saturday morning pics, then for me RAF. All of these things had the underpinning of belonging and some sense of duty. The ceassation of national service took away the foundations of duty and getting along with others from other backgrounds, but instilled the commonality of nationhood.

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an elder one

Oct 08, 2017 at 15:01

We live in a somewhat depressing time with all the uncertainties, but I'm nonetheless optimistic; we should, and I think will, get out of the wretched European experiment without a deal - a messy expensive business (we've been there before now many times), but as they say variously, to make a nice omelet you need first to crack eggs. Hopefully, our children will also learn something useful thereby, making an omelet included.

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Donald Chan

Oct 08, 2017 at 15:20

Two things, Mark.

Firstly, the schools are a source of inderming traditional values. My son is the same as your daughter. Secondly, how did we explore the world without cerrtainty? Risk and reward seems to be forgotten.

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Mark Stringer

Oct 08, 2017 at 15:36

Donald, yes, I cannot recall a time when people have been spooked so easily by absolutely nothing of any substance.

Risk and reward not something you can in my opinion teach in isolation.

Many people want a sure bet without any chance of deviation.

The schools with the “teach to test” philosophy due to the grades fiasco and league table mirage haven’t helped.

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Donald Chan

Oct 08, 2017 at 17:32

Typo: _ undermining.

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Mark Stringer

Oct 08, 2017 at 17:55

We knew Donald what you meant.

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