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Pound Sterling suffered a 14th consecutive daily decline against the Euro on May 23, confirming the entrenched downtrend that has been in place since May 06 continues to guide the exchange rate lower.

The departure of May, expected by as early as June 10, will trigger a leadership contest within the Conservative Party that should make for a summer of uncertainty for the currency as the various candidates lay out their pitches.

Of importance to the Pound will be the intentions of Borish Johnson, the current favourite to replace May: What will Johnson's intentions regarding Brexit be? What he says could well have an impact on currency markets.

What is certain is that uncertainty is to remain elevated, creating the conditions for further declines in Sterling.

"Our longstanding position has been that some combination of a 'no deal' Brexit and/or early elections will continue to weigh on the GBP, so we continue to expect a political risk discount to remain embedded in the currency," says Stephen Gallo, foreign exchange strategist with BMO Capital.

BMO Capital forecast Sterling to be at 1.22 against the Dollar and 1.11 vs. the Euro in six months.

At the time of writing the Pound-to-Euro exchange rate is quoted at 1.1318, down from multi-month highs at 1.1776 registered on May 07. May's low was set on Wednesday and is at 1.1311.

"The British pound remains under pressure amid ongoing domestic political uncertainty, says Hann-Ju Ho, an economist with Lloyds Bank. "GBP/USD and GBP/EUR are heading towards 1.26 and 1.13 respectively."

According to news reports, Prime Minister Theresa May will on Friday set out plans to step down.

According to the FT, Downing Street advisers will gather at 10am to be briefed on her decision.

Conservative MPs expect May to set out the week of June 10 as the most likely time for her formal departure as party leader.

May faced a sizeable backlash to her latest Brexit deal offer, which included a parliamentary vote on staging a second referendum with Conservative MPs seeing this as a buckling to demands made by opposition Labour Party MPs.

The Conservatives have grown impatient with what they see as May's attempts to lead them down the same road: that of a deal which ultimately ends with the Northern Ireland backstop.

It will be up to the new leader to open negotiations with the EU once more, and if the EU are unwilling to negotiate, a 'no deal' Brexit is likely on October 31.

That Sterling is trading lower as 'no deal' risks rise should not surprise anyone as the currency has shown it tends to react to odds of a 'no deal'.

"We raise the risk of a hard Brexit to 25% from 20% and remove the chance of May’s deal from the scenarios," says Kallum Pickering, Senior Economist with Berenberg Bank.

Berenberg keep the probabilities of a customs union model at 45%, Norway plus model at 10% and no Brexit at 20%.

"However, we note that these probabilities could change drastically in the coming weeks depending on who ends up in Downing Street and we begin to learn just what the fresh pair of legs will bring to the Brexit drama," says Pickering.

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