Pound sinks as City demands end to Tory war

Russell Lynch
Former Conservative Party chairman Grant Shapps has called on Prime Minister Theresa May to resign: Getty Images

Open civil war in the Conservative party gave the pound another hammering on Friday as the City pleaded for a united front on Brexit.

Former Conservative chairman Grant Shapps has gone public over attempts to work up a challenge to Prime Minister Theresa May after a disastrous Conservative party conference, triggering fresh spasms in currency markets.

The pound dropped another 0.7 cent to 1.3062 today, the lowest for a month.

It came as the City of London Corporation’s policy chairman warned that Cabinet infighting risked a damaging “one step forward, two steps back” scenario for the capital’s financial district.

Catherine McGuinness, who previously welcomed May’s Florence speech, voiced her dismay at the latest Brexit wars dominating the conference, and also took a swipe at Foreign Secretary Boris Johnson’s leadership ambitions.

McGuinness said: “You talk about the political backdrop — one does get this feeling from time to time that it is two steps forward and one step back, or sometimes one step forward and two steps back.

“My heart sank when we had everybody agree around transition and then we had the Foreign Secretary for whatever reason — I think the reason is probably fairly clear — coming out with his themes. We do need to see pragmatism and a bit of unity so we can move smoothly through this.”

She added: “I think it is a pity that people are throwing down red lines. What we ought to accept is that we are moving towards Brexit and we have to do that carefully.”

Adam Marshall, director general of the British Chambers of Commerce, said: “Businesses demand competence and coherence, not division and disorganisation, from the party of Government. This has a real impact on business confidence and it has to stop.”

British Property Federation chief executive Melanie Leech added that “now more than ever it’s vital that politicians within parties and across parties pull together”.

Sterling also lost ground against the euro, dropping 0.4 cent.

CMC Markets senior analyst Michael Hewson said the pound could go to $1.25 or lower in the event of a leadership contest or an election. “We are having this debate again about a leadership challenge but this is a luxury that the nation can’t afford. The FX market is projecting that into the decline in the pound.”

McGuinness echoed the comments of Sam Woods, the chief executive of the Prudential Regulation Authority this week calling for a firm transition period by Christmas to prevent financial institutions pushing ahead with contingency plans to move more staff and business away from the capital.

Johnson called for a transition period “not a second longer” than two years on the eve of the conference.