The British pound tanked against its main rivals on Thursday as senior members of U.K. Prime Minister Theresa May’s cabinet resigned, signaling more turmoil and ahead for her leadership and casting fresh doubts on an orderly exit from the European Union.
The pound GBPUSD, -1.7320% dropped to a session low of $1.2751 versus the U.S. dollar, compared with $1.2991 late Wednesday in New York. The move follows a period of volatility for sterling after May on Wednesday said she secured approval from her cabinet for a plan that would execute the exit British voters approved in a June 2016 referendum. Sterling on Thursday morning fetched $1.2791.
Check out: Here’s how much Brexit turmoil might whack the British pound, analysts predict
The euro EURGBP, +1.7918% meanwhile rallied sharply higher against the U.K. currency, buying £0.8850, up 1.6% from Wednesday.
The resignation of Brexit Secretary Dominic Raab and Pensions Secretary Esther McVey coming less than 24 hours after May announced cabinet backing of the deal is sending ripples through British markets and raising questions about May’s ability to hold on to power.
On Thursday, May was met with laughter as she addressed Parliament to lay out her Brexit plan, with audible jeers following her comment that Britain’s exit would be an orderly one. She said the exit would be conducted “in a smooth and orderly way” at the deadline on March 29.
Currency strategists and market participants said the resignation of the top Brexit aide was a big blow to May.
“We think Dominic Raab’s resignation is a big blow, without question. Esther McVey’s is less so, but coming on the heels of Raab it adds to the narrative. What concerns us is how many ministers seeing this news will be pondering if it is better to get their resignations in now rather than wait,” wrote Jordan Rochester, currency strategist at Nomura, in a Thursday research note.
Read: Brexit plan clears first hurdle but tough part lies ahead
A difficult path lies ahead for May.
Failure to secure an agreement would result in a so-called hard Brexit. That means no deal in place to govern the U.K.’s relationship with the bloc. The tentative plan agreed to by the cabinet would end the free movement of labor, a key goal of Brexit supporters.
Some critics, including hard-line Brexiteers within May’s own Conservative Party, charge that the deal fails to adequately deliver on Brexit. And with the Conservatives lacking a majority in the House of Commons, May’s government relies on the support of Northern Ireland’s Democratic Unionist Party, which described the text of the Brexit agreement as a “poor deal,” according to the BBC.
In other major currencies, the ICE U.S. Dollar Index DXY, +0.09% a measure of the U.S. currency against a basket of six major rivals, was up 0.3%, at 97.082, while the euro EURUSD, +0.0177% inched higher to $1.1318 versus $1.1312 late Wednesday
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