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The pound has been trading within narrow trading ranges against its major currency counterparts for a couple of weeks now, as markets await news regarding the next UK Prime Minister.

Currency Pair% Change (Month)Difference on £200,000
GBPEUR3.68%€8,289
GBPUSD2.95%$7,503
GBPCAD3.5%CAD $11,898

Theresa May will officially step down from her position as Prime Minister later today, although she will remain as PM until her replacement is chosen by the Conservative Party.

There are now 11 candidates left after Brexit Minister James Cleverly and Housing Minister Kit Malhouse dropped out of the contest earlier this week. Candidates have until the 10th of June to put themselves forward and as it stands Boris Johnson is favourite to win the position. Candidates vary from Steve Baker on the Hard-Brexit side to Amber Rudd on the Remainer side, so those with a vote, have plenty of varying options to choose from.

The Contest continues

The winning candidate’s attitude to Brexit, and especially whether the UK should leave the EU without a deal in place on the 31st of October, is likely to drive the pound’s value. It’s not unusual that GBP exchange rate movement is subdued at this stage, but it could be the calm before the storm. Those of our readers and clients with a GBP currency requirement should make us aware of their plans over the next few weeks, as the race for PM could be finalised soon and this could impact the pound’s value.

The 1922 Committee, the group which notably put pressure on May to step down, has decided to amend long standing rules that would allow the leadership contest to be shorter than usual. The changes mean that candidates need the support of at least 8 MP’s rather than 2 which was the case when May came to power.

They will then need a minimum of 16 votes in the first ballot which will take place on the 13th of June, and then 32 in the second ballot.

Conservatives weary of handing over power to other political parties

Yesterday Michael Gove, who is one of the favourites to become the next Prime Minister, announced that he would be prepared to delay Brexit beyond the next departure date if it meant that the UK would secure a better deal. He believes that rushing the departure could end badly as it could trigger a general election that could hand power to Labour leader Jeremy Corbyn. Other members such as Ester McVey have announced clear plans to leave on the 31st of October whether a deal is in place or not. Sterling is likely to remain sensitive to these kinds of comments.

Economic updates out of the UK today

Data is light out of the UK for the remainder of the week. At 08.30 this morning the Halifax House Price figures will be released with expectations of a small decline earmarked. There will also be Consumer Inflation expectations released at 09.30 but neither release is expected to carry the weight that political updates could at the moment.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.