Theresa May has been UK Prime Minister since July 2016. Source: EU2017EE Estonian Presidnecy/CC BY 2.0.
A teary-eyed Theresa May headed back into Downing Street at around 10:07 this morning. Her final voice-crackling words were; ‘(I am) grateful to serve the country I love.’ Her speech lasted just a few minutes, as she addressed the nation and informed the awaiting camera crews from across the world of her resignation. It was an inevitability, but a significant moment nonetheless, no more so than for the markets. So why has Theresa May resigned and how have the markets reacted?
Why did Theresa May resign?
Theresa May resigned due to the growing pressure from several directions for her to step down and allow another politician to take charge of the Brexit withdrawal process. Pressure alone would not have been enough to unseat May, but the fact that some of it was internal certainly upped the ante – with a number of her cabinet already quitting over her Brexit policy.
The final nail in the coffin was the rejection of the last deal that she proposed, meaning any hope of May salvaging the situation and getting MPs to back an agreed withdrawal agreement to leave the EU, was all but extinguished. In the end, she was backed into a corner and had no other choice but to resign from the position as Prime Minister.
When is Theresa May stepping down?
Theresa May will step down from her position as Prime Minister and leader of the Conservative Party on 7 June, exactly two weeks from now. She would likely have left much sooner, but a state visit by US president will take place in the UK on 3 June, which will go ahead as planned with May in place to greet him.
How has the pound reacted to Theresa May’s resignation?
In the minutes following May’s speech, both GBP/USD and GBP/EUR spiked up. For a moment, it seemed as though there would be sustained, rapid growth, as GBP/USD and EUR/GBP rose to 1.27089 and 1.13595 respectively, but that was swiftly quashed with a subsequent fall back to the pre-speech level.
Both pairs have been expectedly volatile, but it will be difficult to determine what their next moves are. They may have even already priced in the PM’s departure, meaning the next significant change will likely be when her successor is appointed.
How has the FTSE reacted to Theresa May’s resignation?
The FTSE 100 (or UK 100) followed a similar pattern in the minutes following May’s resignation speech. Bulls sent its price up from around 7270 level to 7285, but that again fell as quickly as it rose.
It may need more than just a new PM to help the FTSE make gains, as the lack of clarity regarding Brexit will do little to help equities and inspire investor confidence.
What is going to happen next after Theresa May’s resigned?
Once the Trump visit is out of the way, work will officially begin to try to find a new Prime Minister, be it a permanent or temporary replacement. It’s more than likely that the process will begin much sooner, if it hasn’t already, but nothing will be released to the public until May has fulfilled her duties as PM.
Former Foreign Secretary, Boris Johnson, is the favourite in the race to become the next Tory leader. Second favourite is a former Secretary of State for Exiting the EU, Dominic Raab. Other names in the hunt are Michael Gove, Jeremy Corbyn, Nigel Farage, Jeremy Hunt and Andrea Leadsom.
What has been the reaction to Theresa May’s resignation?
Jeremy Corbyn had no kind words for the soon-to-be departed, slamming her governance and calling for an ‘immediate General Election.
His joy was shared by others who feel the PM had become inept and was incapable of delivering Brexit.
But many also had sympathy for May at the difficult, even ‘impossible,’ job she had.
While others were fearful of what the future holds without May as PM.
Her legacy is unlikely to be too positive, with Brexit failures overshadowing any positive work she has done in office. Uncertainty, that is resonating through the markets, still remains, but a little more clarity may come once the next Prime Minister is in place.