Financial markets seemed unperturbed by the political shockwaves following the announcement that British Prime Minister Boris Johnson would receive a vote of no confidence in his leadership. When he won the vote, they continued as they had done before.
The pound rose against the dollar and other major currencies, while the FTSE 100, Britain’s main stock index, closed 1 percent higher on Monday. With bets pointing to Mr Johnson’s survival, the result didn’t deter expectations, with market moves rather reflecting global concerns over the war in Ukraine and central banks’ efforts to curb inflation.
Samuel Tombs, the UK’s chief economist at Pantheon Macroeconomics, wrote in a letter to clients after the ballot was called but before the ballots were submitted that the pound’s appreciation was modest. Regardless of how the vote went, he said, the move by some in his party to impeach him has been favorably received as markets tend to value conservative governments and could increase the party’s chances of winning the next election. be under a new leader if Mr Johnson had lost the vote.
Shortly after the voting results were announced, the pound strengthened 0.4 percent against the US dollar and 0.6 percent against the euro, largely preserving gains made earlier in the day. In the past three and a half weeks, the pound has gained 3 percent against the dollar, regaining some of the ground lost in the previous months.
All in all, Mr. Tombs, in his statement for the results, insisted that the outcome of the no-confidence vote “will not have a major impact on the near-term economic outlook,” in part because the chancellor, Rishi Sunak, recently launched a multi-billion-pound plan to help households. with inflationary pressures on their finances and rising energy bills.