The uncertainty surrounding the future of British Prime Minister Theresa May has resulted in the loss of value to the Sterling.
There is a movement to oust the Conservative Party leader after she gave a highly criticized speech.
Theresa Mary May is a British politician who is currently the British Prime Minister. She is also the leader of the Conservative Party since 2016. May’s ascent to the top position in British politics was kickstarted by the Brexit vote. Then British Prime Minister David Cameron stepped down in 2016 after Britain narrowly voted in favor of Brexit. He had been an open advocate against leaving the European Union. Thus, his six year tenure as the Prime Minister of Britain came to an end. After his resignation, Theresa May, won an unchallenged leadership election in July 2016. May has been the Member of Parliament (MP) for Maidenhead since 1997.
In an unexpected move, British Prime Minister Theresa May called for general elections on June 8th, 2017. At the time, she noted that she wanted a stronger mandate to govern UK and additionally push for Brexit. However, the election resulted in the Conservative Party losing its majority. May had to strike a deal Northern Ireland party the Democratic Unionists to form a minority government. At the time, there were calls for her to step down.
The Conservative Party was founded in 1834 by Robert Peel. It is a centre-right political party in the United Kingdom.
The loss of the snap elections also resulted in May losing much of her mandate to push the agenda of the Conservative Party. On October 2017, May attempted to regain his foothold in politics through a keynote speech to the nation. However, the speech itself was marred by a number of mishaps. In the beginning, a prankster Simon Brodkin walked up on stage during the speech and gave her a P45 (it’s considered a ‘pink slip’ in the UK). Later, she was overcome with coughing fits. Oddly, the stage set behind her began to collapse. Her speech has been widely mocked and criticized.
Reports began to emerge that May’s future is uncertain. Grant Shapps, former Conservative chairman has come out and openly criticized her. He also said that it was reasonable for Tory MPs to urge her to step down. Additionally, he revealed that at least 30 Tory MPs (although not ones part of the cabinet) supported this move. He said, “We did have a result that was not at all what anyone wanted, least of all what she wanted or anticipated, and . . . sometimes when things happen you have to take responsibility for them. This is a view I have held for quite some time and quite a lot of colleagues feel the same way, including five former cabinet ministers.”
The markets have also responded to speculation around May’s future. The value of the Sterling went down nearly 1% on October 5, 2017. Stephen Gallo, of BMO Financial Group, said: "What is happening with sterling is a mix of a general dollar strength and renewed jitters about the future of the leadership of the Conservative party."
Our assessment is that Theresa May has not only lost a significant portion of the public’s trust but also the trust of the members of her own party. Hence, she does not have the requisite mandate required to lead either the nation or the party. The fall of the Sterling is a reflection of the political instability. We believe the movement to oust May will build momentum in the recent future.