The pound is now down 0.5% against the euro, with one pound currently worth €1.15 after Morgan McSweeney resigned yesterday. The pound also dropped 0.1% against the dollar. Meanwhile, 10-year gilts climbed to above 4.54% – up three basis points. Jane Foley, a foreign exchange strategist at Rabobank, told Bloomberg:
“The market will be very wary of UK political jitters particularly if it starts to look likely that the next PM may come from the left wing of the Labour party.”
The markets are already pricing in a new PM. The line that a change of leader would trigger a bad reaction won’t stick…
Speaking about Morgan McSweeney’s resignation, skills minister Jacqui Smith told Times Radio:
“It’s clearly not ideal but I do understand why Morgan, as he explained, decided to resign at this point. But the important thing as you say is how we both tackle what this Epstein and Mandelson scandal has identified and also how we make sure, as the prime minister is absolutely determined to, that we continue the change that the country needs and that’s what I’m focusing on this morning.”