“Pound Slides as Pressure on May’s Leadership Adds to Brexit Woes.”
The pound slumped as much as 1 percent as political developments in the U.K. cast a shadow on Prime Minister Theresa May’s ability to push for the Brexit deal she aims for.
Sterling snapped a two-day rally after the Sunday Times reported 40 Conservative members of Parliament, just eight short of the number needed to trigger a leadership challenge, have agreed to sign a letter of no confidence in her. Gilts gained as the clock ticked down to a December summit with the European Union, and the opposition Labour party accused May of lacking the support of her own party to deliver the Brexit transition period she’s proposed.
Sterling fell the most since Nov. 2 as leveraged accounts aggressively sold the currency, according to traders in London, who asked not to be identified as they weren’t authorized to speak publicly. The Times report came as the Mail on Sunday reported that Foreign Secretary Boris Johnson and Environment Secretary Michael Gove wrote a joint memo to May, demanding that a Brexit transition end in a maximum of two years.
“It coincided with the leak of the letter from Gove and Johnson to May apparently instructing her how to run the talks,” said Jane Foley, head of currency strategy in London at Rabobank. “Both suggest further trouble in the cabinet and since this would have negative implications for Brexit talks, the political outlook currently appears very rocky for the pound again.”
The pound dropped 1.02 percent to $1.3064 as of 9:19 a.m. in London. It declined 0.9 percent to 89.17 pence per euro, while the yield on 10-year U.K. government bonds fell three basis points to 1.31 percent.
“Venezuela meets creditors in bid to dodge default.”
Venezuela opens talks with creditors on Monday to renegotiate a crippling debt that has left citizens sifting through garbage for food, as the once-prosperous OPEC nation seeks to avert a default that would plunge its economy into deeper crisis.
President Nicolas Maduro’s government has summoned to Caracas investors who hold some $60 billion in junk bonds in a desperate bid to shore up public finances squeezed by the unraveling socialist economy.
Big investors said they largely planned to skip the meeting because of concerns about U.S. sanctions on senior Venezuelan officials and security in violence-torn Caracas, and confusion over what Maduro hopes to achieve. But various investors confirmed to Reuters they were sending lawyers or representatives to the 2 p.m. (1800 GMT) meeting at the ornate “White Palace” over the road from the president’s office.
Markets were optimistic on Friday that Venezuela would continue to service its debt despite the odds, noting Maduro’s government had made close to $2 billion in payments in the past two weeks, albeit delayed.
“People have bet on Venezuela declaring default – never,” Maduro said on Sunday, insisting his government was victim of a U.S.-promoted “economic war.” But many say Maduro’s promise to restructure and refinance debt rings hollow when U.S. sanctions make both options all but impossible, and that his government may be paving the way for a default despite promises to the contrary.
“EU gives impetus to joint defense plan.”
Most of the European Union’s member states have signed up to a plan for closer defence co-operation. The UK and Republic of Ireland are among five states not participating. The other 23 are now committed to the permanent structured military co-operation («Pesco») plan to boost their defence budgets and joint capabilities.
EU forces have gone to some hotspots, including the Central African Republic and Kosovo. But in some cases they have been short of funding and equipment.
Under Pesco, each country has to provide a plan for national contributions. The participants will be backed by a European Defence Fund that should be worth €5bn (£4.5bn; $5.8bn) annually after 2020. The money will be used for weapons research and equipment purchases. Deployment decisions would remain in the hands of national governments, an EU Council statement said. And Pesco does not replace member states’ participation in Nato or UN missions.
UK Foreign Secretary Boris Johnson said the UK saw promise in Pesco and pledged to be «supportive» from the outside. «We are there, like a flying buttress to support the cathedral,» he told reporters. US President Donald Trump has urged America’s European Nato allies to spend more on their own defence, arguing that they rely too much on US protection.
Russia’s military intervention in Ukraine in 2014 alarmed EU members that were once part of the Russian-dominated Soviet bloc. Russia accuses the EU and Nato of unfriendly and threatening expansion up to its borders.
“Strong earthquake hits Iraq and Iran, killing more than 400.”
More than 400 people were killed in Iran when a magnitude 7.3 earthquake jolted the country, state media said on Monday, and rescuers were searching for dozens trapped under rubble in the mountainous area. At least six have died in Iraq as well.
State television said more than 407 people were killed in Iran’s deadliest earthquake in more than a decade and at least 6,600 were injured. Local officials said the death toll would rise as search and rescue teams reached remote areas of Iran.
The earthquake, which struck on Sunday, was felt in several western provinces of Iran but the hardest hit province was Kermanshah. More than 300 of the victims were in Sarpol-e Zahab county in Kermanshah province, about 15 km (10 miles) from the Iraq border.
Iranian state television said the quake had caused heavy damage in some villages where houses were made of earthen bricks. Rescuers were laboring to find survivors trapped under collapsed buildings.
The quake also triggered landslides that hindered rescue efforts, officials told state television. At least 14 provinces in Iran had been affected, Iranian media reported.
Iranian Supreme Leader Ayatollah Ali Khamenei offered his condolences on Monday, urging all government agencies to do all they could to help those affected. State TV appealed for blood donations.