Theresa May is to step down as leader of the conservative party on the 7th June but will remain caretaker PM whilst a leadership contest decides who will take over her role.
Her resignation has been widely anticipated in the markets as she’s come under extreme pressure over recent days and weeks over her handling of Brexit. We’ve seen the Pound gain a little on overdue expectations but the reality is that this doesn’t really change anything regarding Brexit and even with a new leader the impasse still remains for the near future.
Sterling will likely take direction from expectations of who will take over as PM. The current favourite is Boris Johnson – a fervent Brexiteer – and if this sustains, then the Pound may remain under pressure as a no-deal scenario becomes a more likely option. There will be a host of names thrown into the hat and the most likely options are all Brexiteers (although some are more diplomatic in their approach preferring a deal over no-deal).
Either way, it seems that the whole Brexit saga is likely to continue for a lot longer and many banks have increased their odds of the 31st October deadline being extended further.
The GBP/USD currently trades a cent higher from yesterday’s low and the GBP/EUR has only gained a smidge.