String of scandals trips up sterling ahead of new Brexit talks

By Polina Ivanova

LONDON, Nov 8 (Reuters) - Sterling slipped on Wednesday, with a string of scandals in the ruling Conservative party and evidence of growing doubts over Prime Minister Theresa May's ability to deliver a good Brexit deal putting pressure on the pound.

Despite Britain heading into another round of divorce negotiations with the European Union later this week in Brussels, investors' focus was firmly stuck in London, where May's minority government has stumbled into several controversies.

The future of May's aid minister Priti Patel was in doubt on Wednesday after reports she had held several undisclosed meetings with senior Israeli politicians during a private holiday.

The controversy risks shattering May's already dwindling authority, following a sexual harassment scandal that swept through parliament last week and led to high-profile resignations.

"The possibility that May may have to sack another minister today does lead to another wave of speculation about the relative weakness of her government," said Jane Foley, senior currency strategist at Rabobank, adding that these developments would weigh on sterling.

The pound fell 0.3 percent to $1.3133 on Wednesday, around a cent away from a one-month low of $1.3040 hit on Friday in the wake of the BoE (Shenzhen: 000725.SZ - news) 's interest rate decision.

Against the euro it was trading 0.4 percent lower, at 88.34 pence.

The pound plummeted last week after the Bank of England raised interest rates for the first time in over a decade but pushed back investors' expectations for further rate hikes.

The Bank told investors to expect just two more hikes in the next three years, adding that even these plans were dependent on the outcome of negotiations over Britain's departure from the European Union.

Confidence in the government's ability to secure an all-important trade deal and protect the economy from the possible shocks of a 'no deal' Brexit has been shaken by political drama in Westminster in recent days.

"Many are wondering if Theresa May's tenure as prime minister may be near its end," FxPro analysts wrote in a note to clients on Wednesday.

A poll by ORB International on Tuesday showed a record 66 percent of Britons disapprove of May's handling of Brexit talks, up from 64 percent last month, with increasing scepticism that leaving the EU will make the country better off.

The poll also showed only 27 percent were confident that May will get the right Brexit deal.

(Reporting by Polina Ivanova; Editing by Jemima Kelly and William Maclean)