The British pound dropped over 1% to below $1.36 amid political turmoil and growing uncertainty over UK fiscal leadership. Speculation surged after Chancellor Rachel Reeves appeared visibly emotional during Prime Minister’s Questions, and PM Keir Starmer did not explicitly back her following the government's U-turn on a controversial welfare bill. Though Downing Street denied any resignation, and the Treasury attributed Reeves' reaction to a personal matter, markets grew increasingly uneasy. The situation adds to concerns about fiscal credibility, especially given the recent budget retreat and limited fiscal headroom. Investors fear instability around Reeves’ position could derail the UK's economic plans, triggering a selloff across markets. Meanwhile, BoE policymaker Alan Taylor called for accelerated rate cuts, warning of a rising risk of a hard landing.