[HONG KONG] The pound struggled on Monday to recover from last week’s sharp losses that came in the wake of a shock British election result that has thrown the country into uncertainty.
Sterling took a beating on Friday after Prime Minister Theresa May’s ruling Conservative Party lost their Westminster majority, days before it holds crunch talks with the EU on exiting the bloc.
Mrs May called the election three years early in a bid to strengthen her hand in looming Brexit negotiations, but the gamble backfired spectacularly and now she must rely on the support of Northern Ireland’s Democratic Unionist Party.
“With May’s leadership teetering on the brink, the UK steps ever so closer to the calamitous Brexit cliff edge scenario,” Stephen Innes, senior trader at OANDA, said in a note.
“Certainly, prolonged uncertainty would argue for a deeper correction on Sterling as May’s diminished Brexit mandate scenario plays out.”