Both the pound and British stocks rose higher on the news that Prime Minister Boris Johnson is to step down.
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After weeks of turmoil, Johnson announced his intention to step down in a speech outside No. 10 Downing Street.
The embattled leader, who had faced controversy over sexual misconduct within the Conservative party says he will remain in his position, “until a new leader is in place.”
Both the pound and UK stocks lifted, as investors hoped that the news would spell an end to a period of political uncertainty in Britain.
By 8.25am in Britain, the FTSE 100 had gained 1.2% and the FTSE 250 midcap index had risen 0.9%.
But investors and market strategists said that Johnson’s departure won’t fix the deeper economic problems facing Britain.
Mike Owens, global sales trader at Saxo Markets, said: “We’ve seen GBP pop higher on news that Boris Johnson has decided to resign as prime minister.
“Although predominantly driven by the strong dollar, another less significant factor pushing the pound lower over recent weeks has been the political uncertainty, so I think we can expect to see some relief being priced into the UK currency as more details of Johnson’s plan to step down are announced.
“Financial markets prefer certainty and this situation is no different.”
Micheal Keusch, a fund manager at Bellevue Asset Management told Bloomberg News, “I don’t believe this resignation will have a big impact on markets.
“It certainly brings incremental uncertainty, but in the grand scheme of things, with all the real big uncertainties around, I don’t think this will be moving the needle much.”
