Pound Headed For Record 14-Day Losing Streak As May Resignation Expected
Instead of hanging on for what would be a fourth vote on the withdrawal agreement she negotiated with the European Union – an agreement that is widely despised in Parliament because of the possibility that the hated ‘Irish Backstop’ could trap the UK in the EU Customs Union indefinitely – Theresa May might instead step down, or set a date for her resignation, according to an FT report.
When the government published its itinerary for future business on Thursday, it left no time set aside for debating the “WAB” – that is, the withdrawal agreement bill – during the week of June 3. Though a senior Tory whip filling in for Andrea Leadsom (who resigned as Commons leader last night) insisted that the government still wanted to debate the bill, anonymous sources cited in the British press were skeptical.
Rumors that May had been preparing to resign on Wednesday night didn’t pan out, but many still expect May to either resign or decide on a firm departure date before the end of the week, as the backlash to the latest iteration of her withdrawal plan – which included a provision for a Parliamentary vote on a second referendum – intensifies. Graham Brady, the leader of the 1922 Committee of Tory backbenchers, reportedly told the prime minister that she would face another leadership challenge if she decides to move ahead with a vote on her withdrawal bill. Leadsom’s departure has also fostered rumors that more cabinet members could follow her lead and resign.
Should the Brexit Party garner a decisive plurality of the vote in the European Parliamentary elections on Thursday – as is widely expected – that would be yet another rebuke to the PM.
Amid all of the uncertainty, the pound weakened on Thursday for the 14th straight session as May’s refusal to go quietly creates more uncertainty surrounding the Brexit outlook. And the prospect that she will be replaced by a Brexit hardliner, thereby raising the odds of a no-deal exit.
“Uncertainty is the only clear certainty in the near term,” said Westpac macro strategist Tim Riddell.
“The risk of a hard-Brexit replacement for May has increased the risks of a hard Brexit result or even a forced no-deal exit,” he added. “Such an event would likely force GBP lower, increase risks of assets sliding and BOE (Bank of England) taking counter action to support assets.”
Looking further down the road, May stepping aside could open the door to an early general election, which would up the chances of Brexit being cancelled or interminably delayed. The currency traded at roughly $1.2645 Thursday morning in New York, not far from its lows for the year.