June 2, 2023

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Sterling and FTSE 100 rise ahead of expected resignation of British Prime Minister Boris Johnson

Sterling and FTSE 100 rise ahead of expected resignation of British Prime Minister Boris Johnson

Sterling pound It hit a session high on Thursday amid expectations that British Prime Minister Boris Johnson will resign later in the day.

The pound was up 0.35% against the US dollar to trade at $1.1971 around 9.25 am London time. It trimmed its gains a little to trade around $1.199 at 10.40 am

A Downing Street spokesperson told NBC News that Johnson will make a statement to the country later on Thursday.

Meanwhile, the FTSE 100 The stock market index rose 1.12% after multiple media reports, Including Sky NewsThe prime minister is about to resign. CNBC and NBC News were unable to independently verify these reports.

In the bond markets, the UK government for 10 years Bond yield It rose to 2,181

come next More than 50 deputies resigned From Johnson’s government within 48 hours.

The prime minister has been under mounting pressure since Tuesday, when two heavyweight government ministries, the Minister of Health and Finance, resigned his position. This led to a series of departures from the government.

Roger Jones, head of British equities in London and Capital, told CNBC that there was “some relief” in the currency markets because it was looking as if “this won’t be long and it will go on with the prime minister refusing to go and eventually causing a political stalemate.” “.

The first resignations began in earnest on Tuesday, but Johnson clung to his post, appointing alternate ministers. However, even some of the new recruits now told him that he needed to go.

“You know in your heart what is the right thing to do, go now,” newly appointed Finance Minister Nadim al-Zahawi said in a message.

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Market players are already wondering that a resignation will mean the UK economy.

British Prime Minister Boris Johnson responds to a question from the media during his press conference at the NATO Summit on June 30, 2022 in Madrid, Spain.

Dennis Doyle | Getty Images

“If Boris Johnson resigns as Prime Minister later today, as the media is now reporting, it is likely that fiscal policy will be looser and monetary policy may be a bit tighter,” Paul Dills, chief UK economist at Capital, said. Economics in a note.

How did we get here

Thursday’s developments come in the wake of a prime ministership plagued by scandals and allegations of misleading the public, but the straw that broke the camel’s back for many MPs includes Conservative lawmaker Chris Pincher. The former vice president was arrested, last week, amid accusations that he groped two men while drunk at a private members’ club.

Johnson apologized on Tuesday for appointing Whip Pincher as party vice chair – a major role in the party – despite knowing of an investigation into his conduct in 2019.

The revelation that Johnson was aware of the allegations of misconduct led to the resignations of Chancellor Rishi Sunak and Health Minister Sajid Javid on Tuesday.

In his resignation speech to Parliament on Wednesday, Javid, who is also a former adviser, said that “treading the tightrope between loyalty and integrity has become impossible in recent months.”

Johnson narrowly escaped a confidence vote from Conservative Party MPs last month, but many of those who once supported his leadership have now ditched their support.