The pound won a little earlier when May announced his resignation but quickly wiped out those gains by raising the lead to 1.2710 before returning to 1.2670. Against the chaos, what does this mean for the pound now?
In essence, Brexit's path does not change, as shown by the equation. Regardless of a new leader, the stalemate still remains. Hence, where should the pound go?
In short, things have become a bit gambling about who will be the next prime minister. Given that Boris Johnson is a favorite - and that he is Brexiteer - the pound is basically trading on the expectation that he will take over. If he's still going to be a favorite, expect further downward pressure, as no-deal Brexit is a possible option.
Chart: Used with permission from Bloomberg Finance L.P.
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