Investing.com – The pound weakened on Monday after Ian Duncan Smith, Secretary of State for Work and Pensions and a big voice in the Conservative party, unexpectedly announced his resignation late Friday over disagreements on a budget he considers to be “deeply unfair”.
GBP/USD dropped 0.46% to 1.4415 at 9:34AM GMT, or 5:34AM ET, GBP/JPY fell 0.42% to 160.81, while EUR/GBP rose 0.28% to 0.7809.
In a parting statement on Sunday, Duncan Smith explained that his decision was not based on his support for the leave campaign, known as Brexit, with regard to the referendum on Britain’s membership in the European Union (EU) to be held on June 23.
He criticized the budget for causing substantial reductions in disability benefits while offering tax cuts for the wealthy.
“I am resigning because I want my government to think again about this and get back to that position that I believe, which is about being a one-nation (party)”, Duncan Smith stated in an interview on BBC Television.
“I believe they’re losing sight of the direction of travel,” he added.
Prime Minister David Cameron could comment on the resignation at 15:30GMT, or 11:30AM ET, when he is scheduled to report to members of Parliament on the recent EU summit.
Strategists at Société Générale (PA:SOGN) considered that the division of government would “simply add another layer of risk to the sterling’s prospects” as concern over Brexit also held back the pound.
The Confederation of British Industry, that backs the remain campaign for the June 23 referendum, warned on Monday that leaving the EU could cost the U.K. economy £100 billion and 950,000 jobs by 2020.