London, March 19 (Bloomberg) -- The British pound, down 2.7 percent against the dollar in the past five days, may decline as expectations mount that the U.S. will lead a war in Iraq this week. The British currency fell to $1.5637 at 7:20 a.m. in London, from $1.5651 late yesterday. The pound has lost 2.2 percent against the dollar in the past month. It was at 67.90 pence per euro, from 67.94 late yesterday. There are ``political risks weighing on the pound,'' said Monica Fan, senior currency strategist at RBC Capital Markets. She doesn't favor holding more pounds than is recommended by one's benchmark. Fan added that a ``relief rally in the dollar'' also is hurting the British currency.
U.K. Prime Minister Tony Blair's readiness to use force to disarm Iraq has left him at odds with many of his voters and legislators within his ruling Labour Party. A third of Labour's lawmakers rebelled in a parliamentary vote yesterday on his plan to send British troops to war against Iraq. ``Blair's standing has been badly damaged,'' making the pound less attractive to investors, said RBC's Fan. Cabinet member and former foreign secretary Robin Cook resigned this week. U.K. International Development Secretary Clare Short decided to stay in the government, British Broadcasting Corp. reported. The dollar yesterday strengthened to its highest in two months against the euro and rose versus the Swiss franc as traders bet a quick victory would draw investment back into the U.S. Crude oil had its biggest decline in 16 months. //www.quote.bloomberg.com