British Stocks Threatened Following May's Resignation

British Prime Minister, Theresa May had announced her resignation date due to the divorced deal of the Brexit Agreement Withdrawal. Shortly after her resignation announcement, both Euro and Pound Sterling were pressured. Stock market were also affected negatively. A survey from Global Regulatory outlook stated that May’s unexpected resignation made a significant impact to the FTSE 100 as it went up to 0,7 percent and the midcap index rose 0,4 percent. However, as the no-deal brexit might eventually occur as the EU rejects to do any negotiation, certain sectors which are prone to Brexit and political changes such as house-builders, UK domestic banks, retailers and airlines might be grounded if the no deal-Brexit is implemented, therefore affecting stocks associated with the sectors negatively. May is announced to step down on June 7th, or until the new prime minister is found. It is expected that the new prime minister is a pro-Brexit so there will be no domestic political changes in the future.

Furthermore, political tension between Europe Union (EU) and Italia are boiling, driving the Euro to depreciate, pushing a more aggressive EU policy making in the future. Euro weakened 0,1% which is the lowest in the last two years, and Pound 0,05% for the last four months. Whilst in England, as the hard Brexit is already envisioned, Boris Johnson, the vocal representative of English parliament, strongly against EU, at the moment is still considered superior as the successor of May. Morten Lund, the currency expert, said that the probability of Hard Brexit can be up to 15%-20%. Thus, the unstable political conditions leads to high uncertainty which leads to an uncertain future for Euro and Pound sterling both.

WIth Theresa May stepping down, her successor will have a huge task on his or her hand to right the wrongs that Theresa May has done over her tenure as Prime Minister, including bringing back together a divided nation between the pro and contra Brexit groups, and the political elite with the wider public after she had failed to make Brexit happen in her tenure. According to reports by CNBC international, the search for a replacement has already begun with ex-Minister of Foreign Affairs Boris Johnson leading the pack with a 40% chance according to the betting market. Investors are not too keen though hearing this news because Boris Johnson is very much on the strong side of the anti-EU sentiment and he is pro-Hard Brexit. According to the moving average convergence divergence (MACD) graph, pound sterling is still moving below the moving average. Britain’s FTSE 100 was up 0.7%, by 11.00 GMT and the midcap index rose 0.4%, just slightly off of its opening levels. Traders and investors said the market has already priced since the rumours first started circulating about Ms. May’s resignation. Therefore, it may be a turbulent future ahead for the British financial condition as Brexit lurks.

Source:

CNBC Indonesia

The National

Financial Times

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