24 May, 2019
Theresa May to step down as Tory Leader on 7th June.
Despite the volatile day ahead due to the recent political uncertainty, the Pound is currently up 0.5% against the Euro, standing at €1.1327, and up 0.12% against the Dollar, standing at $1.2672.
The Prime Minister announced her resignation in an emotional speech and will step down as Conservative leader on 07th June.
Theresa May stated that she had done her best to respect the 2016 EU referendum outcome, and that she has “deep regret” about being unable to bring forth Brexit.
May’s latest Brexit plan led to her facing backlash from MPs and the step down of Commons Leader, Andrea Leadsom, because she did not believe it would “deliver on the referendum result”.
Sajid Javid, Home Secretary and Jeremy Hunt, Foreign Secretary, met with Mrs May at Downing Street to address their concerns about the Bill.
According to the PM, a consensus in Parliament should be built by her successor for Brexit to be delivered.
She went on to say that “Such a consensus can only be reached if those on all sides of the debate are willing to compromise,” and she ended her speech with “I will shortly leave the job that it has been the honour of my life to hold.”
“The second female prime minister, but certainly not the last.”
“I do so with no ill will, but with enormous and enduring gratitude to have had the opportunity to serve the country I love.”
Seema Shah, Senior Global Investment strategist at Principal Global Investors says that it was no surprise when Theresa May made the announcement that she will resign, however, with Boris Johnson in the lead to take over, a no-deal is more likely.
“At $1.27 against the dollar, sterling has weakened in recent weeks, reflecting the repricing of Brexit risk as Theresa May’s time as PM draws inexorably to a close.
“Are we pricing in a no deal Brexit at these levels? No, the market is simply indicating that the risks of a no deal Brexit have increased.
“Were that nightmare scenario to unfold, sterling closer to parity against the dollar should be expected.”
The British Chambers of Commerce said: “The UK is already paying the price for a political system at war over Brexit.
“Our hard-earned reputation as a great place to do business has been tarnished.
“Any leadership contest must be swift and followed urgently by a clear plan to break the impasse. The clock is still ticking down to 31st October, regardless of who is in Downing Street.”
Dean Turner, UBS UK economist believes that “despite what he or she may claim on the campaign trail, the new PM will not find delivering Brexit any easier than May did.” He added, “while the possibility of a no-deal exit has risen, we still do not believe a no deal outcome will prevail. Going back to the voters increasingly seems like the only way to break the deadlock.”
Senior Economist at Hermes Investment Management, Silvia Dall’Angelo, believes that “the risk is that under the next leader – most likely coming from the intransigent Eurosceptic wing of the Tory party – the institutional tensions between the executive and Parliament will intensify, potentially generating an even more fragmented and dysfunctional political landscape.”
She goes on to say that “the next stage will probably result in early general elections, but other outcomes are possible, including a second referendum and a no-deal Brexit (the latter being the default scenario under current Brexit legislation).”
“At any rate, the Brexit situation is unlikely to be resolved any time soon, and uncertainty will persist, which will continue to weigh on the country’s economic prospects and financial assets.”
Connor Campbell from Spreadex said “it is hard to see what the thinking is behind sterling’s rise.”
“The chance of a no-deal Brexit has only increased, be it either through the UK bungling out of the EU because it can’t get its house in order, or because the Tories will appoint a hard-line Brexiter as leader following the mass defection of voters to Nigel Farage’s Brexit Party during the European elections.”