The pound was pressured lower on Monday as a recovery in the dollar and renewed concerns over Brexit weighed, with British Prime Minister Theresa May’s European Union withdrawal bill under fire.
GBPUSD was down 0.68% at 1.4066, pulling further away from last Thursday’s post Brexit vote high of 1.4344.
Sterling came under pressure as the dollar regained some ground against a currency basket, but the greenback’s gains were held in check amid doubts over the Trump administration’s commitment to a strong currency.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.27% to 89.11, extending its recovery from last Thursday’s three-year trough of 88.25.
The dollar has also weakened as it has lost its relative yield attraction for investors. A faster rate of monetary tightening outside the U.S. would lessen the divergence between the Federal Reserve and other central banks.
Sentiment on the pound deteriorated after a committee of UK lawmakers said Monday that legislation to end Britain’s EU membership has “fundamental flaws”, and should be substantially changed, even though it has already been voted through the House of Commons.
The remarks came as the House of Lords prepared to debate the legislation this week.
May is facing a rebellion within her own party that could threaten her leadership, over the best route out of the EU, which Britain is scheduled to leave in March 2019.
She is under mounting pressure to offer more clarity about what Brexit deal Britain wants, or face the growing risk of a no-confidence vote.
The euro rose to one-week highs against the weaker pound, with EURGBP rising 0.32% to 0.8811.