As its recent trading trajectory would suggest, investors are bracing for another summer of uncertainty in the UK. Adding to the instability, investors are bracing for news of Theresa May's sudden ouster (she has already purportedly promised to step down by mid-summer), which is looking increasingly likely.
The British pound weakened on Tuesday as mounting opposition to May's Brexit deal, and the push to oust her from No. 10, are weighing on the currency. At its lows, sterling was off 0.3% at $1.2688, its lowest since Jan. 15.
If May goes, the jostling to replace her could lead to a general election later this year, or early next. Though a new leader might push the EU to finally acquiesce and reopen negotiations, judging by the success of the last round of negotiations, a swift, positive outcome seems remote. It also remains unclear how a Brexit resolution would be reached before the new deal deadline (Halloween).
However, that hasn't dissuaded May's critics. After aggressively confronting May, Tory backbenchers wrested a promise from the PM that she would step down in the not-too-distant future. Now, May is facing pressure from her cabinet, which has complicated May's efforts to win her senior ministers' backing for her withdrawal agreement, which is expected to be called for a fourth vote early next month.
At the same time, Jacob Rees-Mogg, the leader of the Brexiteer faction, said on his podcast - the "Moggcast" - that he wouldn't back May's withdrawal agreement, like he did during the most recent vote. Mogg explained that he backed the deal last time to try and ensure that the UK would 'leave on time'. Yet, here we are...
"Mrs May’s deal is a very bad deal, let’s make no bones about that, so as we’ve already delayed it’s hard to see any point in having a bill which fails to avoid the European elections, fails to get us out on time, fails to get the process going that might have worked with a new leader coming in because Mrs May said if it came in she would go," Mogg said.
After No. 10 failed to secure a deal with Labour, what little chance May's deal had evaporated. May's last remaining option is to try and use her resignation as a carrot to pass the agreement and finally take the UK out of the EU (She has promised to resign if the deal is passed). But that approach hasn't had much success so far.
Should she resign, here's the FT's list of the most likely candidate to replace May:
- Jeremy Hunt, foreign secretary
- Sajid Javid, home secretary
- Boris Johnson, former foreign secretary
- Michael Gove, environment secretary
- Dominic Raab, former Brexit secretary
- Amber Rudd, work and pensions secretary
- Matt Hancock, health secretary
But among these, most expect Johnson to emerge as the frontrunner in the battle to replace May. And, as the Spectator writes in a recent column, the only thing that can stop Johnson is himself.