Sterling falls after pro-Brexit minister resigns

[LONDON] Sterling fell by around half a per cent in early trade in Europe on Monday, hit by concerns a split in Britain's ruling Conservatives over last week's budget and June's referendum on leaving the European Union was deepening.

Dealers said there was concern that the row after the resignation of "Brexit" supporter Iain Duncan Smith from the cabinet showed Prime Minister David Cameron may struggle to hold the bulk of the party together in favour of an "In" vote in June.

"Sterling does not normally react strongly to UK politics so this is probably due to Brexit," said Richard Benson, head of portfolio investment at currency managers Millennium Global in London.

"The referendum is just making people focus on issues like this a lot more."

The pound fell 0.6 per cent to US$1.4392 in early trade in London. Against the euro, it fell 0.5 per cent to 78.20 pence.

REUTERS