Britain's government on Monday dismissed opposition suggestions that Prime Minister Boris Johnson faces a financial conflict of interest over Brexit after receiving donations from fund managers who may be betting on a fall in the pound.
Former finance minister Philip Hammond said in a newspaper column on Saturday that Johnson was "backed by speculators who have bet billions on a hard Brexit" and would benefit if the pound fell further. John McDonnell, the opposition Labour Party's finance spokesman, asked the government on Monday to respond to the comments by Hammond, who was kicked out of the Conservative parliamentary party this month over Brexit disagreements.
Simon Clarke, a junior finance minister, dismissed the worries. "We do not accept that there is any prospect of a conflict of interest," Clarke told McDonnell in parliament. "It is genuinely dispiriting that in the mother of parliaments we find ourselves debating material which is more fit to the tin-foil hat brigade than it is for parliament at a crucial time in our country's history."
Sterling plunged after the Brexit referendum in June 2016 and is widely expected to slide again if Johnson takes Britain out of the European Union on October 31 without a transition deal, something he says he is prepared to do despite efforts by parliament to stop him.
A number of hedge fund managers were among the donors who poured hundreds of thousands of pounds into Johnson's campaign to become prime minister in July.
McDonnell asked on Saturday for Britain's top civil servant, Mark Sedwill, to investigate any conflict of interest following Hammond's remarks. Clarke said there would be no probe.
Speculators trading in the United States had a $6.3 billion short position against sterling last week, according to the Commodity Futures Trading Commission, a US regulator which says the numbers are "often used as a good proxy for hedge-fund activity".
This total is down from a two-year high of $7.8 billion in late August and an all-time peak of $9.6 billion in June 2015. Sterling, trading little changed on Monday at around $1.23, has lost about 18% of its value against the dollar since the 2016 referendum and is down by a similar magnitude against the euro.
Investors in hedge funds, however, say their interest in speculating on sterling has been limited because the political situation is so unpredictable and the foreign exchange market so volatile.
Crispin Odey, a well-known hedge fund manager who gave 10,000 pounds ($12,300) to Johnson's campaign to be prime minister, told the Guardian newspaper on Monday that his funds had a neutral position on British companies and that he had spoken to Johnson only once since Johnson became prime minister.
Clarke said the government did not comment on the level of sterling in general - which it was happy to see set by the market - or on individual currency positions.
Other Conservative Party politicians said they expected there would be a much sharper fall in sterling if Labour came to power and implemented its left-wing plans.
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