UK PM May to resign on 7 Jun - a new PM by summer
After her meeting with the 1922 Committee, Theresa May has agreed to stand down, announcing that she will formally resign on 7 Jun to make way for a new leader of the Tory party and eventually PM. Until a successor is chosen, Theresa May will be acting as interim leader, but the market will now be focusing on the new candidates, of which Boris Johnson is the favourite to take over.
On her statement, we saw Cable rally to a little over 1.2700, but this was quickly rebuffed as buyers of EUR/GBP came in at 0.8800-05 again, a lever we touted earlier. If we manage to push under 0.8790-85, then we could finally see a pullback here as it has been 15 days since we last saw a down day for the cross rate.
For Cable, we are watching levels at 1.2705-10 and now 1.2725-30. Any further push higher is unlikely to breach 1.2800 unless we see another hit on the USD, in which case EUR/USD could also rally. US durable goods on the agenda, so this is the next market risk that traders will turn to.