- Lawmakers from UK Prime Minister Theresa May’s own party have submitted a letter calling for her to stand down, triggering a no-confidence vote.
- The pound fell on the news but then edged higher in Wednesday-morning trading as Brexit outcomes were thrown into question.
- “There is now a higher chance that we could see Article 50 delayed to allow the UK more time,” one analyst said.
The pound whipsawed in early-Wednesday trading, falling on news of a vote on Prime Minister Theresa May’s leadership but then recovering as investors weighed the impact on Brexit.
The pound hovered at $US1.25, up 0.4%, as of 9:52 a.m. in London. May said on Wednesday morning that she would contest any vote on her leadership “with everything I’ve got.” Lawmakers from her own party submitted a letter calling for her to stand down, meaning a no-confidence vote would soon be held on May’s leadership.
That sent the pound lower Wednesday morning, but it then edged higher and held steady as May said she would fight to persevere in executing the country’s exit from the European Union.
While uncertainty in the government weighs on the currency, the potential for a delayed Brexit is positive for the pound. Generally, businesses favour staying close to the European markets.
“The question for the pound is not who the leader is per se, but what it means for Brexit,” said Neil Wilson, the chief market analyst for Markets.com. “Huge instability will remain whatever the result of the confidence vote. The clock is ticking on a no-deal exit, although there is now a higher chance that we could see Article 50 delayed to allow the UK more time. More permutations than you can shake a stick at.”
Global stocks rally
Elsewhere in markets, global stocks rallied after President Donald Trump said he would intercede in the case of the executive Meng Wanzhou if such an extraordinary step could secure a favourable trade deal with China, Reuters reports.
The Euro Stoxx 50 was up almost 1% on Wednesday morning, following a 0.3% gain in the Shanghai Composite Index. S&P 500 futures were rallying 0.6%.
“Whatever’s good for this country, I would do,” Trump said in an interview with Reuters.
Meng, the CFO of the tech giant Huawei, was detained in an airport while changing flights in Vancouver, British Columbia, on December 1, triggering an international incident that has unnerved markets and US-China trade experts alike.
Asked whether he would intervene with the Department of Justice in her case, Trump indicated that he would if it would lead to a favourable outcome for national security interests and the signing of a trade deal with China.
“If I think it’s good for what will be certainly the largest trade deal ever made – which is a very important thing – what’s good for national security – I would certainly intervene if I thought it was necessary,” Trump said.
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