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The pound pile on has continued with sterling coming under even more pressure as political uncertainties have landed on top of economic worries, following a damning report into the Partygate scandal.

The probe by senior civil servant Sue Gray has engulfed the UK government in a fiercer storm of criticism, as she pointed the finger of blame at the leadership for allowing a party culture to develop as the country was in lockdown and millions of citizens were in isolation.

As traders speculated over just how untenable Boris Johnson’s position as Prime Minister is, sterling fell further against the dollar and the euro before making up some ground.

National Landlord Investment Show – MPU

By mid-afternoon the pound was trading at $1.249 down from $1.255 in morning trade, while against the euro sterling also fell before rebounding a little to trade around €1.173.

By taking full responsibility there is speculation that Mr Johnson could still evade being ousted and a close eye will be kept on the number of letters from MPs calling for his resignation.

Already the pound had been on the slide over fears about the fragility of the UK economy following much weaker than expected data showing a marked slowdown in business activity.

This has led to expectation that the Bank of England will be forced to ease off on the accelerator when it comes to higher interest rates with the market now expecting fewer hikes.

That is in contrast to the expected path of regular, although not extreme, higher hikes from the US Federal Reserve and comes as a new hawkish attitude has appeared at the European central bank, trends which are adding more strength to both the dollar and the euro.

Susannah Streeter
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.
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Susannah Streeter
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown

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