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Theresa May Announces Resignation on June 7th –ICE FX Outline the Currency Markets Reaction

ICE Markets

Yesterday morning on May 24th 2019 ICE FX watched LIVE along with billions of people around the world as Theresa May the leader of the Conservative party in the UK, announced her resignation as Prime Minister, to take place on June 7th. The initial currency market reaction following the announcement was that the GBP jumped above 1.2700 above the USD, however this swiftly decreased back to previous levels.

May will remain in office until a new Tory leader is appointed which is expected to take place by the end of July 2019. According to the UK bookmakers the new UK Prime Minister candidates and their likelihood of obtaining the position are as follows: Boris Johnson (6/4), Dominic Raab (6/1), David Lidington (8/1), Andrea Leadsom (10/1), Jeremy Hunt (11/1), Michael Gove (12/1), Sajid Javid (22/1).

So what is next for the UK and how a new Conservative leader and subsequently a new Prime Minister be elected? Please find below our ICE FX guide to the British parliamentary process and how a new UK Prime Minister will be selected from the Conservative party.

The process is two-fold, firstly Conservative MP’s will put their own names forward for the position. This will then be followed by several rounds of voting from MP’s which will narrow the amount of eligible candidates down, by the MP with the fewest votes in each round being eliminated from the running, until there are only the two most popular candidates left. Stage two, sees the final two candidates run against each other and they are voted for by MP’s in a ballot vote and the most popular candidate will then be elected as the Conservative party leader.

At the moment UK Foreign Secretary Boris Johnson is in pole position to take over from May as Prime Minister, but what impact would this have on the GBP? There are suggestions this could in fact be good for Sterling, for many traders this would be a strong indication to sell the GBP! However, at ICE FX we recognise that Boris is a hard-line Brexit supporter and has previously indicated that he would take Britain out of the EU even without a Brexit deal being in place! If this took place Britain would have to revert to the World Trade Organization (WTO) rules which would be negative for the GBP.

However, Boris has changed his mind before with regards to Brexit and therefore at ICE FX we suggest this could happen again. His commitment to a no-Brexit deal is not as strong as sometimes portrayed and therefore if he is elected Prime Minister there is a chance he could reverse his opinion, subsequently meaning the sharp decline of the GBP may not occur.

ICE FX will keep you updated as developments occur and the impact UK political matters have on the currency market. Visit the ICE FX website.

ICE Markets Review

Source: https://ice-fx.com/en
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