May 8, 2019 / 8:22 AM / 4 months ago

Sterling falls on barren Brexit talks, pressure on PM May

* Graphic: World FX rates in 2019

* Graphic: Trade-weighted sterling since Brexit vote

LONDON, May 8 (Reuters) - Sterling fell on Wednesday as Brexit negotiations lumbered on with little sign of a breakthrough and concern grew about a challenge to Prime Minister Theresa May’s leadership.

Britain’s Conservative government and the opposition Labour Party are struggling to break a parliamentary deadlock over the country’s departure from the European Union.

The impasse has weakened the pound, which on Wednesday was stuck near $1.3 and heading for its third consecutive day of losses.

The government also conceded on Tuesday that Britain would take part in European Parliament elections this month, a poll that could deliver more bruising results to both major parties.

“The announcement that the UK will take part in European elections confirms that cross-party Brexit talks aren’t going anywhere fast. This also refocuses attention on a leadership challenge to May. Favour the pound to “$1.2950,” said ING analysts in a note to clients.

Against the dollar, the pound slipped as much as 0.3 percent to $1.3035. It also weakened 0.4 percent against the euro to 85.95 pence.

May agreed a withdrawal deal with the EU last year, but it was rejected three times by a deeply divided British parliament. That delayed the exit date, a postponement that has weighed on the pound as investors fret about prolonged political uncertainty.

Sterling has traded in a narrow range of $1.28-$1.31 since Britain pushed its scheduled departure from the European Union back from March until Oct. 31. There is still little clarity about when, how, or even if, Brexit will happen.

Investors have been broadly impervious to tepid economic data recently and even relatively hawkish comments from the Bank of England last week failed to jolt the currency. (Reporting by Tom Finn; Editing by Kirsten Donovan)

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