the pound fell from a one-month high versus the dollar after a senior member of the U.K. government resigned on Friday, deepening the rift in the ruling Conservative party just three months before the referendum on Britain’s European Union membership.
Sterling weakened against all but one of its 16 major peers and was the worst performing currency among the Group-of-10 nations. Iain Duncan Smith, a former leader of the Conservatives and a prominent figure supporting the campaign for Britain to leave the EU, a so-called ‘Brexit,’ criticized the government on its cuts to welfare benefits while taxes for higher earners and companies were being decreased.
The British currency was also weighed down by a report from the Confederation of British Industry that said leaving the EU would cost the U.K. 100 billion pounds ($144 billion) in lost economic output and 950,000 jobs by 2020.
The pound “trended weaker against the dollar and euro due to the political trembling over the weekend,” analysts at Royal Bank of Canada in London, including senior U.K. economist Sam Hill, wrote in a note to clients. The CBI study “suggesting that the U.K. would be significantly worse off under an EU exit scenario” also hurt sterling, they wrote.
The pound fell 0.5 percent to $1.4404 as of 9:29 a.m. London time, after climbing to $1.4514 on March 18, the highest since Feb. 16. Sterling weakened for the first time in three days versus the euro, dropping 0.4 percent to 78.15 pence.