Pound prospects are the most bearish since the Brexit start

Investors are the most bearish on the pound since the U.K. voted to leave the European Union as markets brace for the possibility of a no-confidence vote in Prime Minister Theresa May’s leadership. The Sun newspaper reported that 42 lawmakers have sent letters of no confidence against May, with six more needed to trigger a leadership challenge.

The pound declined more than 1 percent last week after several of May’s ministers quit in disagreement over her Brexit divorce deal with the EU. The political turmoil has opened up a multitude of risks for sterling, including the prospect of new elections or even a second referendum.

Should the Prime Minister manage to stay on, she will still have a challenge getting her Brexit deal — which leaves the U.K. tied to the EU’s customs union — through parliament. RBC Capital markets said last week that the best and worst-case scenarios could lead to a 10 percent swing in the currency. May will spend Monday appealing to business leaders, addressing the Confederation of British Industry later in an attempt to convince them to back an agreement few in her own party think is ideal. The pound gained 0.2 percent to $1.2857 as of 7:51 a.m. Monday in London. Against the euro, it advanced 0.3 percent worth 88.76 pence after having slumped close to 2 percent last week.