Sterling traded below $1.22 on Monday and weakened against the euro, hurt by rising gilt yields and media reports of disagreements between the finance minister and his cabinet colleagues over the terms of Britain's exit from the EU, Reuters reported. The Daily Telegraph said Phillip Hammond could quit his post after he was excluded from government meetings because he criticised the "hard" Brexit stance of Prime Minister Theresa May. Although the Treasury denied that Hammond will quit, it did little to instill confidence in the pound, traders said. Sterling fell to $1.2172, having lost over 6 percent in the past two weeks after May raised the spectre of a "hard" Brexit where the government will negotiate for an exit that favours tighter immigration controls over free trade, likely curbing foreign investment needed to fund Britain's huge current account deficit. The euro was up 0.2 percent at 90.20 pence while trade-weighted sterling was at 73.9, not far from a record low of 73.4 struck last week. Speculators trimmed their net short bets against the pound in the week to Oct 11. Traders said the selloff in gilts was hurting sentiment towards the currency. The 10-year UK gilt rose to 1.17 percent, trading near its highest since the June referendum.
