File photo: British Pound Sterling banknotes
The pound traded flat against the dollar and the euro on Monday ahead of a debate in parliament that could reveal significant dissatisfaction within British Prime Minister Theresa May's party over her plans for Brexit.
Sterling has struggled to capitalise in recent weeks on signs the economy is improving because of mounting uncertainty over whether Britain can secure a trade deal with the EU before it leaves the bloc in March.
Markets expect the Bank of England to hike interest rates in August but the British currency has fallen 9 percent since April partly because of a dispute between May and members of her party who feel she wants to keep Britain too closely tied to Brussels.
The prime minister is expected to survive today's debate on a customs law but a vote on amendments will indicate the extent of parliament's dissatisfaction with her plan.
A former senior British minister called on Monday for a second referendum to solve a parliamentary stalemate on Brexit, saying Prime Minister Theresa May's proposals for new ties with the European Union were a fudge that satisfied no one.Justine Greening, an ex-Education Secretary who quit the government in January, said May's negotiating strategy would neither please those who wanted a clean break with the EU nor those who opposed Brexit altogether.Trump says US-Russia ties have 'never been worse'"We'll be dragging Remain voters out of the EU for a deal that means still complying with many EU rules, but now with no say on shaping them," Greening wrote in the Times newspaper."It's not what they want, and on top of that when they hear that Leave voters are unhappy, they ask, 'What's the point?'. For Leavers, this deal simply does not deliver the proper break from the European Union that they wanted."May has ruled out a rerun of the 2016 vote in which Britons voted 52-48 percent to leave the bloc.China looks to get cozy with EU in annual talks as Trump tariffs biteHer Brexit negotiating strategy, which aims for a close relationship with the EU after Britain leaves the bloc in March 2019, was only agreed with her cabinet earlier this month after two years of wrangling. Two senior ministers resigned in protest shortly afterwards.May is now facing a possible rebellion from Brexit supporters in her Conservative Party who want her to ditch her plan when lawmakers vote on amendments to legislation on the government's post-Brexit customs regime on Monday.However, she has told unhappy lawmakers that they needed to back her or risk there being no Brexit at all.Thailand gave diplomatic immunity to Australian medical team in cave rescueGreening said that with divisions in the Conservatives and the opposition Labour Party over how to proceed with Brexit, there should be another vote, with the public able to choose between May's plans, a "no-deal" break with the EU or remaining in the bloc."The only solution is to take the final Brexit decision out of the hands of deadlocked politicians, away from the backroom deals, and give it back to the people," she said.
Former UK minister calls for second vote on Brexit to end stalemate
That risks undermining the government and could increase the chances of an early election which would hurt the pound.
"Political uncertainty helps to explain why the pound has not strengthened yet on the back of the government's plans for a softer Brexit," said analysts at MUFG.
At 0815 GMT the pound traded flat against the pound at $1.3242 and against the euro at 88.30 pence. .
Sterling finished last week down one percent against the dollar, its biggest weekly drop since late May.
President Donald Trump's visit to the UK last week added to uncertainty about Brexit talks and Britain's trade relationship with the United States after the divorce.
British Prime Minister Theresa May warned her divided party on Sunday that there may be "no Brexit at all" if they wrecked her plan to forge a close relationship with the European Union after leaving the world's biggest trading bloc."My message to the country this weekend is simple: we need to keep our eyes on the prize," May wrote on Facebook. "If we don't, we risk ending up with no Brexit at all."Netanyahu, Trump discuss Syria, Iran ahead of Helsinki summitLinking the fate of Brexit to her own survival in such an explicit way indicates just how precarious May's position remains after her government was thrust into crisis and U.S. President Donald Trump publicly criticised her Brexit strategy.With less than nine months to go before the United Kingdom is due to leave the EU on March 29, 2019, the country, the political elite and business leaders are still deeply divided over what form Brexit should take.UK PM May says Donald Trump told her to sue the EU over BrexitBy warning that Brexit itself is in danger, May is sending a blunt message to the dozens of hardline Brexiteers in her party that if they sink her premiership then they risk squandering the victory of an EU exit that they have dreamed about for decades.Some pro-Brexit Conservatives fear that a deal could emerge that leaves Britain tightly bound to EU rules and represents a Brexit in name only.The British government has also stepped up planning for a so called "no deal" Brexit that could spook financial markets and dislocate trade flows across Europe and beyond.Turkey’s great struggle against FETÖMay has repeatedly said Brexit will happen and has ruled out a rerun of the 2016 referendum, although French President Emmanuel Macron and billionaire investor George Soros have suggested that Britain could still change its mind.Seeking to strike a balance between those who want a smooth Brexit and those who fear staying too close to the EU's orbit, May sought the approval of senior ministers for her plans on July 6.After hours of talks at her Chequers country residence she appeared to have won over her cabinet, but just two days later David Davis resigned as Brexit secretary, followed by her foreign minister, Boris Johnson, the next day.Trump's portrayal of NATO in crisis carries risks for allianceMay called on Sunday for the country to back her plan for "friction-free movement of goods", saying it was the only option to avoid undermining the peace in Northern Ireland and preserving the unity of the United Kingdom."SUE THE EU"Davis, writing in the Sunday Times, said it was an "astonishingly dishonest claim" to say there is no worked-out alternative to May's plan. He said her plan would allow EU regulations to harm British manufacturers."Be in no doubt: under the government's proposal our fingers would still be caught in this mangle and the EU would use it ruthlessly to punish us for leaving and handicap our future competitiveness," Davis said.German spy chief: Neo-nazi NSU murders still in darkSteve Baker, a senior lawmaker who served as a deputy to Davis in the Brexit ministry before resigning with his boss, said May had presided over a "cloak and dagger" plot to undermine Brexit.May's position was further undermined by Trump who said in an interview published in Rupert Murdoch's Sun newspaper on Friday that her proposals would probably kill off any chance of a post-Brexit trade deal with the world's biggest economy.May on Sunday revealed that Trump had previously advised her to sue the EU rather than enter into an exit negotiation with the bloc."He told me I should sue the EU," she told BBC television. "Sue the EU. Not go into negotiations - sue them."Erdoğan pens letter to families of July 15 martyrsThough Trump later contradicted his comments by then promising a great U.S. trade deal, the president made clear his admiration for the 54-year-old Johnson, who Trump said would one day make a great British prime minister.Steve Bannon, Trump's former adviser, was even quoted by Britain's Daily Telegraph as saying that it was now time for Johnson to challenge May for her job."Now is the moment," The Telegraph quoted Bannon, Trump’s former strategist and a key player in his 2016 election campaign, as saying."If Boris Johnson looks at this... There comes an inflection point, the Chequers deal was an inflection point, we will have to see what happens," Bannon said.TENSIONS IN PARLIAMENTJohnson, the face of the Brexit campaign for many has remained silent in public since he warned in his resignation letter on July 9 that the "Brexit dream" was being suffocated by needless self-doubt.When asked on Sunday if she would stand if a Conservative Party leadership contest was triggered, May declined to directly answer saying: "I am in this for the long term."The extent of the danger to May from rebels in her party will become clearer over the course of two debates in parliament this week.Pro-Brexit lawmakers are expected to use a debate on Monday on customs legislation to try to force her to harden up her Brexit plan, while a debate on trade on Tuesday will see pro-EU lawmakers push for even closer ties with the bloc.Brexiteer rebels are unlikely to have enough support in parliament to win a vote, but the debate will show how many in May's party are prepared to vote against her at a time when some are looking to gather the numbers needed to challenge her leadership.If May does clinch a Brexit deal with EU leaders, lawmakers could still vote it down.Voting down a divorce deal so late in the process would trigger a major political crisis in Britain which would then be on course to crash out without any formal Brexit arrangements for trade, immigration and security.
British PM May warns: Back me or risk 'no Brexit at all'
May attempted to face down would-be eurosceptic rebels by warning on Sunday that if they sink her premiership then they risk squandering the victory of an EU exit that they have dreamed about for decades.
Meanwhile over the weekend, German business groups told members to prepare for a hard Brexit.
Long bets on sterling have been whittled down in recent days with overall net positions mildly bearish on the currency, positioning data shows.