LONDON, July 12 Reuters The British pound slipped to a fresh twoyear low on Tuesday thanks to a broad dollar rebound and as political uncertainty weighed on sentiment.

Boris Johnson39;s resignation as prime minister last week deepened the uncertainty hanging over the British economy, already under strain from an inflation rate heading for double digits, the risk of a recession and Brexit.

Britain39;s main opposition Labour Party will put forward a motion for a noconfidence vote in Johnson39;s government on Tuesday, with the vote expected to take place on Wednesday, a source in the party said.

Sterling will be buffeted by leadership questions as there is a question about the extent to which we will see a conservative leader who is intent on fiscal discipline or a prime minister intent on unfunded tax cuts, which would trigger a more aggressive response from the Bank of England, said Sarah Hewin, a senior economist at Standard Chartered.

Until the leadership question is decided, sterling may stay volatile.

The issue of tax cuts was fast becoming the central battle in the leadership race with nearly all of the candidates promising to cut business or personal taxes. Former Chancellor Rushi Sunak, the early frontrunner, however is the only candidate who has played down the prospect of imminent tax cuts.

Aside from politics, weakening economic data is also a factor. Economists expect May GDP data on Wednesday to show no growth, reinforcing expectations of an economic…