Normally, a state leader resigning and creating new political uncertainty would cause a sharp selloff in the country’s currency,
But Johnson’s departure, after two days of “utter domestic political chaos”, should at least reduce some of the downside risks facing the pound
The initial reaction in the pound sterling and UK gilts confirm markets are broadly taking the change well. Near-term, however, volatility is likely to persist, as it is likely UK will have no clarity on the new prime minister. inflation and the cost-of-living crisis are set to continue to increase.
But Johnson’s departure, after two days of “utter domestic political chaos”, should at least reduce some of the downside risks facing the pound
The initial reaction in the pound sterling and UK gilts confirm markets are broadly taking the change well. Near-term, however, volatility is likely to persist, as it is likely UK will have no clarity on the new prime minister. inflation and the cost-of-living crisis are set to continue to increase.
