Government turmoil hits the pound
By politics.co.uk staff
Rumours that the prime minister might be quitting sent the pound tumbling against the dollar and the euro this morning.
The pound was heading for its biggest weekly decline against the dollar since April, a clear reaction to the current uncertainty in the government.
Against the dollar, the pound slid to a weekly low of $1.6022 and fell to a two-week low of 1.1277 ? against the euro, a 3.5 per cent drop since Wednesday.
The British currency had hit a seven-month high of more than 1.66$ earlier this week and had reached a high of almost 1.17? this week.
But last night, work and pensions Secretary James Purnell resigned from the government and called for the prime minister to step down.
Speculation that Gordon Brown would resign saw the pound falling sharply but was dismissed as “absolute nonsense” by the PM’s office.
The pound seems to have recovered as the reshuffling of the Cabinet is currently under way and the results of the local elections start coming out.
