The value of the pound has increased on news of Boris Johnson’s impending departure as Conservative leader.
The euro surged 0.5% against the dollar to $1.1976 just minutes after the shocking claims from Downing Street broke, rebounding from two-year lows.
UK stocks increased as well. After news of the incident leaked, the domestically focused FTSE 250 index reached a session high.
The FTSE 100, which typically gains from a declining pound, had risen 1.2% by 8.30 am, or about 30 minutes before the news broke.
After the news broke, it briefly fell, but it has since recovered.
The FTSE 100 is up at day’s opening, just as it was before Mr. Johnson’s resignation was announced.
Later today, Mr. Johnson will formally announce his resignation in a speech to the nation.
However, Mr. Johnson may continue in his position until a replacement is selected in the autumn because there is no obvious leader in the background and a number of Tory frontrunners are anticipated to challenge for the top position.
It comes after top ministers resigned on Wednesday, putting the government in danger of collapsing and causing the British pound to fall to two-year lows against the dollar.
The saying “buy the rumor, sell the fact” applies here, according to David Madden, an analyst with Equiti Capital.
The pound has decreased significantly as a result of resignation rumors. I believe that markets have already factored in a change of leadership, which should create some short- to medium-term stability.
“We’ve seen GBP rocket higher on news that Boris Johnson has opted to leave as prime minister,” said Mike Owens, global sales trader at Saxo Markets.
The political unpredictability has been a less important element in recent weeks’ declines in the pound, which is why I believe we may expect to see some respite priced into the UK currency once more information about Johnson’s resignation plan is revealed.
Financial markets favor predictability, and this circumstance is no exception.
The UK stock market was also doing well, he continued, but this shouldn’t be tied too closely to the political environment.
Although it’s a solid morning for European markets generally and it’s tough to credit much of the rise to the political headlines, we also see the FTSE 250 hitting the highs of the session.
According to Susannah Streeter, senior financial and markets analyst at Hargreaves Lansdown, “the political squabble over whether the Prime Minister should remain in office or step down is ended.”
The pound rose against the dollar, returning to $1.20 before sliding back somewhat, as a result of the rapid change in Westminster’s mood music and Boris Johnson’s decision to quit 10 Downing Street.
The FTSE 100 has remained firmly in positive territory since the news, aided by the still-weaker pound, according to Ms. Streeter.
Investors are appreciating the laser-sharp attention being placed on inflation, and the financial markets are experiencing ripples of relief that the sky-high prices appear to be about to decline.
Runaway inflation is still seen as the threat to global economic stability, and while abrupt slowdowns and recessions may result, the mindset that it is better to act quickly to stop a further price spiral is generally embraced.
It happens at the same time that it was made public that Mr. Johnson will resign today after his new Chancellor told him to leave and eight more ministers walked out asking that he embrace reality.
After a game-changing intervention by Nadhim Zahawi, who was just named on Tuesday night following Rishi Sunak’s resignation, the PM conceded defeat a half-hour later. Mr. Johnson was informed that his status was “not sustainable.”
According to a source in No. 10, Mr. Johnson has spoken with Sir Graham Brady, the head of the Tory 1922 Committee, and has agreed to step down. A new Tory leader is expected to be in place by the party conference in October.
The prime minister will address the nation today, according to a spokesman.
Mr. Zahawi appeared to have delivered the fatal blow with his public appeal on Mr. Johnson to cave in, even if he refrained from resigning.
“Prime Minister: This is not sustainable and it will only get worse: for you, the Conservative Party, and most crucially of all the country,” he wrote in a tweet. You must depart immediately and act morally.
Just two hours after Northern Ireland Secretary Brandon Lewis resigned, Michelle Donelan, who took office at the same time as Mr. Zahawi, also announced her resignation.
Even though there was clear evidence that the PM’s power was eroding, he had pledged defiance up until that point.
The Tory MPs’ acceptance of Mr. Johnson sticking on until October—more than two months—is far from certain. There will be concerns about whether more than 50 government officials can simply be reappointed or even if they would agree to it.
George Freeman, who this morning announced his resignation as minister of science, said Mr. Johnson should apologize to the Queen and suggest that she appoint a caretaker PM.
“Boris Johnson ought to resign from his position, apologize to Her Majesty, and suggest that she appoint a caretaker prime minister,” he stated.
“To take over today so that ministers may resume their duties and we can select a new Conservative leader to try to repair the damage and rebuild trust,” the statement reads.
We must rapidly get rid of the Johnson poison, a former minister told MailOnline.
Mr. Lewis tweeted at 6:47 a.m. that he was unable to go on without “honesty, integrity, and mutual respect.”
There are only so many times you can apologize and move on, Treasury Minister Helen Whately said after her.
By 7.30 am, security minister Damian Hinds, science minister George Freeman, and pensions minister Guy Opperman had arrived.
Welsh Secretary Simon Hart resigned last night, and Wales minister David TC Davies publicly stated that he had turned down a promotion to replace him.
Suella Braverman, the attorney general, has demanded that Mr. Johnson step down and claimed that her only reason for remaining in office is to keep the government running.
With well over 50 resignations, the government was unable to find a minister willing to speak out for the PM this morning, and his team was completely silent for hours.
Chris Heaton-Harris, the chief whip, was photographed entering Downing Street early after the PM’s apartment lights were seen being on well into the night.
But Mr. Johnson’s detractors flocked to the studios in droves.
Former Cabinet member Julian Smith said that the prime minister was planning to create a “small replica” of the Capitol riots in the UK after observing how Donald Trump responded to them during the US election.
Allies even suggested that Mr. Johnson would attempt to provoke a hasty election in a last-ditch effort to retain his position, which might plunge the monarchy into a constitutional crisis.
Carrie Johnson was asked by veteran Tory MP Bernard Jenkin to intervene and persuade her husband to give up.
It is wonderful news for the nation that Boris Johnson has resigned as prime minister, according to Labour leader Sir Keir Starmer. But it ought to have taken place long ago.
He was never suited for office. On a massive scale, he has been accountable for deceit, scandal, and fraud.
And everyone who participated should feel utterly ashamed.
The worst cost-of-living crisis in decades has been brought on by the Tory party, which has caused instability in the nation. And they can no longer claim to be the ones who will solve the problem.
They’ve held that position for 12 years. The harm they have caused is severe.