Pound under pressure as rhetoric heats up on Brexit
The pound faced renewed pressure yesterday after the UK warned it was prepared to walk away from Brexit talks and Theresa May's commanding double digit lead in the polls receded to nine points.
Sterling flirted with a fall below $1.30, and edged close to 86.5p against the euro. And German Chancellor Angela Merkel sent the euro to a six month high after she said the common currency was "too weak".
The pound had risen in recent weeks in the wake of the Prime Minister's announcement of a snap election.
At one point it was estimated she had a 20 point lead over Labour.
But the gap has narrowed to between nine and 13 points, with Mrs May now facing a public backlash over Conservative Party plans to reduce financial supports for elderly people.
The pound is also under pressure after Brexit Minister David Davis warned over the weekend that Britain would walk away from the talks if the bill demanded by Brussels is above €100bn.
Ministers from the remaining EU member states agreed a common Brexit negotiating plan yesterday, telling London that there will be no talks on a new trading relationship until the controversial issue of what it owes is settled.
Dermot O'Leary, an economist at Goodbody stockbrokers, said that there could be political fireworks once the talks get underway.
"A major clash appears to be in prospect when official discussions on Brexit get under way between the UK and the EU [in] four weeks," Mr O'Leary said.
"For the second consecutive weekend, Brexit Secretary David Davis was on the newswires highlighting the very different perspective that the UK has on how the impending negotiations should proceed."