The news from this morning which is directly affecting the markets is that Theresa May and Michael Gove are likely to go head to head for the leadership of the Conservative Party in the U.K., a race which also translates into one for the Prime Minister position. The pro-remain candidate Theresa May announced her intentions earlier today, with Michael Gove joining the race moments ago.
The news is currently being digested by the markets, with sterling getting bid after the first announcement by the Telegraph newspaper and appears to be consolidating its gains in the aftermath of Michael Gove’s announced candidature. The political landscape in the U.K. continues to be rather uncertain, but the big news here is that Boris Johnson appears to be out of the race (for now) as he is highly unlikely to consolidate enough votes to viably challenge Theresa May.
With the pro-Brexit campaigners consolidating behind Michael Gove, the race is likely to be heated-up. Boris Johnson was seen by many MPs as an unlikely choice, due to his extreme positions on some issues. Michael Gove is one of the backers of the leave camp that was very surprised about David Cameron’s resignation.
In her column in the Daily Mail, his wife, journalist Sarah Vine, said that he was shocked to find out that the Brexit camp prevailed and even more shocked at the subsequent outcry of the population.
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The race for the Conservative Party leadership position is likely to impact substantially markets and the prospects for London as the foreign exchange center of Europe. With the European Central Bank issuing sharp warnings that it are likely to mandate the clearing activities of the euro currency outside of London, the industry is worried about the future prospects for the current financial capital of the world.
— Press Association (@PA) June 30, 2016