Sterling remains close to a four-month low against the American currency and a three-month low versus the euro area tender. Despite making brief gains on Friday after Prime Minister Theresa May announced she will stand down as leader of the Conservative Party on June 7, the pound was still floundering around €1.130 and $1.26. As of 8.18am BST, Sterling was worth €1.1337 versus the euro. Against the US dollar, the pound was at $1.2645 at the same time of writing.
Neil Wilson, chief market analyst at Markets.com, said the pound is likely to remain “stuck in the mud” until the Conservative Party has elected a new leader and Prime Minister.
He said: “Sterling remains close to four-month lows, unable to catch any bid out of the $1.26 handle.
“The market is likely to be in wait-and-see mode until we find out who the leading candidates are for the Conservative leader job.”
This sentiment was shared by veteran trader Jonathan Watson in a Sterling prediction piece for this week on Pound Sterling Forecast.
He said: “The outlook for the political situation seems destined to remain very unclear with the Conservative Party leader election getting underway with now ten candidates having thrown their hats into the ring.
“I expect sterling will remain on the backfoot as investors seek to assess where the fortunes for the UK government will turn next, the resignation from Mrs May has removed one uncertainty but created plenty more.”
The race for Number 10 is heating up as several prominent Tories have already thrown their hats in the ring for the top job.
The latest names who are vying to take over from Mrs May are: Boris Johnson, Dominic Raab, Jeremy Hunt, Rory Stewart, Esther McVey, Matt Hancock, Andrea Leadsom, Michael Gove, Sajid Javid, Kit Malthouse and James Cleverly.
Meanwhile, in latest UK business news, a new study has suggested employers remain in “limbo” because of continued uncertainty over Brexit.
Confidence among firms about hiring decisions and in the British economy is still at record low levels, said the Recruitment and Employment Confederation (REC).
Skills shortages were especially reported by firms looking to hire engineering and technical, and health and social care staff, according to a survey of 600 employers.
REC chief executive Neil Carberry said: “The Brexit extension has pushed the threat of a ‘no deal’ into the autumn, and the ending of our survey’s strong downward trend in confidence reflects this, but it is a temporary reprieve, with businesses stuck in a familiar holding pattern.
“The jobs market is robust, but more businesses remain negative about the future than positive.
“This will only change when they have a greater sense of being able to invest with confidence in the UK, and that comes with securing a sustainable and smooth outcome to the Brexit process.
“Employers are particularly concerned about being able to find the right people to grow their business when the moment comes.
“The survey shows that many businesses already have little surplus workforce capacity.”