In June 2016, the UK, under David Cameron went to the polls to vote on whether to remain or exit the European Union. The vote, which surprised many, saw the exit side winning albeit by a small margin. This set in motion a number of events. First, Cameron announced his resignation. He was replaced by Theresa May, who began negotiating with the European Union. A deal was reached in December last year. It was then voted in favor by the EU parliament.
The tough work for Theresa May was to convince the parliament to vote for her deal. The problem with this was that the parliament was highly divided and her party did not have a majority. Worse, she had abandoned the Labour Party in the negotiations. When parliament voted on the deal, they voted to reject it. She tabled the bill two more times and failed.
At the same time, parliament was trying to figure out the way forward. In all this, they tabled almost twenty bills, which failed to pass. The only bill that passed was a resolution to avoid a no-deal Brexit. The irony with this is that if the parliament failed to vote for a deal, and the EU refused to give an extension, a no-deal situation would be in place.
It is against this backdrop that Theresa May announced that she will resign in the coming month. This lifted the sterling slightly. However, the next prime minister will still have the tough decision because of the divisions in parliament and within conservatives.
⇒ See also Key scenarios from March Deadline
UK Prime Minister: the rebus
The key contenders for the next party are: Boris Johnson, Michael Gove, Dominic Raab, Jeremy Hunt, Sajid Javid, and Penny Mordaunt.
Boris Johnson is the former foreign secretary and ex-mayor of London. He is a key proponent of Brexit, who favors a decisive break with the EU. He is not afraid of having a no-deal Brexit.
Raab is the former Brexit secretary, who resigned to protest the deal negotiated by May.
Michael Gove is the environment secretary, who campaigned for the exit. He has however backed the deal negotiated by May.
Hunt is the foreign secretary, who campaigned for remain but now supports Brexit.
Sajid Javid is the home secretary, who played a minor role in the remain side but now backs Brexit.
Finally, Mordaunt is the defense secretary and the only woman on the list. She favors an abrupt break with the EU.
Theresa May’s Resignation: consequences for day traders
For traders, there are a few things to watch in the next few weeks. Obviously, the sterling will be in play. While the currency has made some modest gains, the reality is that a no-deal Brexit is still in play. This means that it will likely continue moving lower.
Second, the FTSE 100 will be at play. This is because it is made up of the biggest 100 companies in the UK. These companies will be significantly affected by a no-deal Brexit. In fact, the index has underperformed its global peers like the Dow and S&P 500.
Finally, the euro and other European stocks will be at play because Brexit will affect them.