Pound, FTSE climb as UK PM resigns
The resignation of the United Kingdom’s Prime Min
Pound, FTSE climb as UK PM resigns
ister Boris Johnson had an immediate effect on the country’s currency and stock index.
Following Johnson’s announcement, the pound’s value has been given a slight relief after tumbling against the dollar and euro on the back of recession fears and the Financial Times Stock Exchange (FTSE) 100 stock index closed 1.1% higher after a recent sell-off.
Giles Coghlan, the chief analyst at MetaTrader platform HYCM, said that the news of Johnson’s resignation “may spell some good news” in some foreign exchange markets.
He explained, “This is likely to be based on the assumption that Johnson’s replacement may restore Conservative party unity and provide the economy with a much-needed fiscal uplift.
The UK has been suffering from a cost of living squeeze, a 9.1% record inflation, and the ongoing war in Ukraine.
Experts said that the next leader will need to provide effective leadership with the current bleak economic picture in the country.
Capital Economics chief UK economist Paul Dales added that the PM’s departure may mean the fiscal policy has to be a bit looser and monetary policy has to be a bit tighter.
“Overall, it’s important not to overstate the economic implications of what is undoubtedly a big political event. And a lot depends on who is the next PM,” he added.
