London: October blues are starting to weigh on the pound — again.

Sterling is headed for its worst week in a year as questions swirl about whether Theresa May will stay or go, even as the prime minister said she had the “full support” of her cabinet. A year ago this Saturday, days after the Conservative Party’s annual conference, the pound slumped more than 6 per cent in less than a minute during thin trading as the markets opened in Asia. One year on, the same factors are still punishing the currency, with doubts on May’s leadership following a mishap-filled party conference speech earlier this week sending the pound lower, and Brexit looking no clearer.

“The double whammy of negative economics and politics continues to weigh on the pound,” said Neil Jones, London-based head of hedge fund sales at Mizuho Bank Ltd. “Domestic disarray and uncertainty are at the helm, and with or without May the pound is destined for lower still.”

The pound fell 0.3 per cent to $1.3085 as of 12:39pm in London, taking its weekly decline to 2.4 per cent. It weakened 0.3 per cent to 89.52 pence per euro. The yield on 10-year UK government bonds was little changed at 1.39 per cent.

Roller coaster

In an attempt to quash rumours of a bid to oust her, May told reporters on Friday that the country needed “calm leadership” and that she was providing it “with the full support of her cabinet.” Sterling pared some of its losses following the comments.

Ex-Tory chairman Grant Shapps had earlier confirmed that up to 30 MPs are backing a leadership election and said they are “perfectly within their rights” to urge May to quit. The fact that the alternative “is a hardline Brexit contender” like Foreign Secretary Boris Johnson is key for the lower pound, said Jones.

“If the current government is toppled, this may delay the Brexit negotiations even further,” said Thu Lan Nguyen, a strategist at Commerzbank AG. “This fear is likely to increase, that there’s going to be a delay and maybe they won’t be able to get a deal done by the end of the Brexit negotiations.”

The pound has been on a roller coaster this year, tumbling to $1.1986 in January as uncertainty surrounding the Brexit process hobbled the currency. By the time of the U.K.’s election in June, sterling had limped back above $1.2600. It had its best month in four years in September, rallying almost 4 per cent after the Bank of England suggested it may be ready to raise policy rates.

Investors in the options market, who turned bullish on the pound following the central bank’s signal, are no longer so sure. The premium to own one-month puts on the currency relative to calls is now 58 basis points, the most bearish traders have been since June.