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Pound falls as pressure mounts on May after Brexit plan disintegrates

Pound set for longest-ever losing streak against euro as pressure mounts on prime minister after fourth version of her Brexit plan appears to collapse.

Pound falls as pressure mounts on May after Brexit plan disintegrates

The pound is on course for its longest-ever losing streak against the euro as prime minister Theresa May faced intense pressure after the apparent collapse of her fourth attempt at securing parliamentary backing for her Brexit plan.

The pound fell to $1.267 against the dollar, its lowest level since January, while the euro was changing hands at 88.16p, as sterling fell against the eurozone currency for the 13th consecutive day. That marks the longest losing streak against the euro since the creation of the currency in 1999, according to Refinitiv data.

May had attempted to win over MPs by offering the prospect of a second referendum and closer trading arrangements with the EU, but her plan came under attack from both Conservative and Labour MPs.

Bloomberg last night reported May was facing pressure to abandon the deal and quit as prime minister within days, with The Sun reported Conservative backbenchers on the 1922 Committee would mount a new bid to force a confidence vote.

'The brief move higher in sterling yesterday in the wake of the prime minister's pledge to add a confirmatory referendum to her withdrawal agreement turned out to be yet another false dawn,' said Michael Hewson, chief market analyst at CMC Markets UK.

'Numerous MPs who might have voted for it have already said they won't, and the calls for her to go have once again become that much louder.'

Deutsche Bank's Jim Reid said the prime minister's Brexit deal appeared doomed. 'The parliamentary math is pretty straightforward in that May needs to gain support from at least a portion of Labour MPs while retaining the backing of her Conservative caucus,' he said.

'As it turned out, we later found out that she has so far failed to get Labour's support and has lost the backing of many within the Tory party.'

Robert Wood, UK economist at Bank of America Merrill Lynch, said the dim chances of the deal succeeding meant he was now assuming no resolution to Brexit until the end of 2020. He cut his growth forecast for the UK economy in 2020 from 1.6% to 1.1%.

'We have previously based our economic forecasts on the assumption of a smooth Brexit allowing a growth rebound in 2020. In our view this no longer makes sense,' he said.

'We struggle to pick the most likely Brexit outcome: no deal, no Brexit and leaving with a deal. The path from here looks rocky to us.

'Seemingly strong support for hard Brexit parties among Conservative voters arguably boosts the chances of a more Eurosceptic replacement for prime minister May this summer and we think an early general election is likely.'

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