Sterling slips on rumors UK government is preparing for a snap election

Estimable fell against the dollar Monday following dismal manufacturing data and speculation that U.K. Prime Minister Boris Johnson could be scheming a general election in the coming months.

The currency slipped 0.7% on the session to trade at $1.2074 by 1:30 p.m. London beforehand, extending losses an hour later to hover near $1.2053. 

Johnson is due to meet his cabinet for an emergency meeting later on Monday, with report in investigates that he will also be speaking to members of the wider Conservative Party too. Opposition lawmakers are trying to pass legislation this week to end a no-deal Brexit — something that has increased in probability in recent months as Johnson has pledged to leave the EU “come what may” on October 31.

Federal commentators have speculated that Johnson could ask his lawmakers to vote for a snap election if opposition MPs are successful in keenness the legislation to block a no-deal Brexit.

“Cabinet is being called for this afternoon,” BBC Political Editor Laura Kuenssberg conjectured on Twitter. “Real possibility now Johnson might put a motion down to ask MPs to vote for an election this week.”

Sky’s political collector also said there were rumors that Downing Street was looking to force a vote on an early selection. The Guardian newspaper’s political correspondent said there were “very strong rumors” that a U.K election could be rebuke a demanded this week and The Sun’s political editor said that Johnson “is preparing to go to the country.”

Asked about an election, a spokesperson for Johnson charged reporters Monday morning that the U.K. leader had already been very clear that he doesn’t want one. For the moment, Jeremy Corbyn, the leader of the opposition Labour party, said that his lawmakers were willing to have a clasp energy general election. This comes despite a warning from former leader Tony Blair that an nomination could be a trap from the ruling Conservative Party.

There has also been speculation over a possible outmoded for an election, which is usually recommended by the prime minister and could be a very contentious issue. Opposition lawmakers intention want the date before October 31 — presumably with some still wanting to overturn Brexit first the deadline — while there are reports that Johnson could instead opt to have the vote in early November thereby weight through some sort of EU exit.

The British pound had already been falling on Monday morning after new details showed manufacturing contracted last month at the fastest rate in seven years. The IHS Markit/CIPS UK Manufacturing Leverage Managers’ Index (PMI) fell to 47.4 from 48.0 in July, far below market expectations.

Jane Foley, chair of FX strategy at Rabobank, noted that the pound had also been falling on news that Conservative MPs could be decoyed out of the party if they voted against the government on the bill to prevent a no-deal Brexit.

“Growing rumors that a dash election could be called has added to the political uncertainty and the pressure on the pound,” she told CNBC via email.

There is not another scheduled vague election in the U.K. until 2022. Britain voted 52% to 48% to leave the EU in the June 2016 referendum.  

—Reuters furnished to this report.