Pound Weakens as City Demands End to Tory War

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On Friday, an open civil war in the Conservative party gave the pound another hammering as the City appealed for a united front on Brexit.

Grant Shapps, the former Conservative chairman, has gone public over plans to work up a challenge to PM Theresa May after an unfortunate Conservative party conference, causing fresh spasms in currency markets.

Today, the pound fell another 0.7 cent to 1.3062, the lowest for a month.

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

Catherine McGuinness, who previously welcomed the Florence speech of PM May, expressed her dismay at the latest Brexit wars that are dominating the conference and also took a swipe at the leadership ambitions of Boris Johnson, the Foreign Secretary.

McGuinness stated: “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 continued: “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.”

The British Chambers of Commerce’s director general, Adam Marshall, stated: “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.”

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

Sterling also weakened against the euro, declining by 0.4 cent.

Michael Hewson, the CMC Markets senior analyst, said that the pound could go to $1.25 or lower if leadership contest or an election occurs. “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.”

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

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