BLBG: Pound Falls, Recovers After Government Denies Brown to Resign
The pound fell, trading at its lowest this month against the dollar, as traders speculated that Prime Minister Gordon Brown was poised to resign. A British government spokesman described the rumor as “nonsense.”
Brown’s government has been rattled by three weeks of disclosures by the Daily Telegraph of personal spending by members of the parliament at public expense. The ruling Labour Party may finish third behind the conservatives and Liberal Democrats in U.K. elections today, a poll by ICM Ltd. showed.
“We’ve heard speculation that Gordon Brown might be resigning,” Lee Hardman, a currency strategist at Bank of Tokyo Mitsubish UFJ Ltd. in London, said before the government’s statement. “The pound is taking a big hit.”
The pound traded at $1.6196 at 1:21 p.m. in London after falling to $1.6090, its lowest since May 28, from $1.6317. It traded at 86.99 pence per euro, after dropping to 87.55.
“Rising uncertainty about the future of the U.K. government may weigh on the pound in the short term,” Ulrich Leuchtmann, head of foreign-exchange research in Frankfurt at Commerzbank, wrote in a note earlier today.
