Another UK Conservative Prime Minister has fallen over the travails of the European Question. Brexit is a much bigger issue than any of PM May’s predecessors (Thatcher, Major, and Cameron) had to deal with but ultimately it was the same old issue that was the undoing of the latest occupant of 10 Downing Street.
Boris Johnson (the former Foreign Secretary and Major of London) is a strong favourite to be the next UK PM and although it is not guaranteed that he will be resident in No.10 by the end of July, whoever claims the top job in UK politics stands a significant chance of the same downfall. There is a good chance that PM Johnson, (or PM Raab, Hunt or even Gove) would call for a strong mandate while stealing the new Brexit Party’s thunder by calling a general election and essentially making the vote another referendum on EU membership, betting victory on a “hard” Brexit with a clear pledge to leave the EU without a deal if necessary. A strong showing by the Brexit Party in this week’s EU elections would increase the likelihood of this scenario playing out.
Indeed Mr Johnson’s immediate comment on Mrs May’s resignation called for a “pragmatic” Brexit, and “The way to get a good deal is to prepare for a no-deal situation,” was what he told a conference in Interlaken, Switzerland. “To get things done you need to be prepared to walk away.” The official race to replace Mrs May kicks off June 10; pressure on the Pound and uncertain equities markets for the UK during the early Summer.
The UK100 has been biased to the downside during May, following the plus-7,500 highs in April. Currently, the 200-day moving average provides support at 7225, while May has posted a 7150 low with weekly and S3 support at 7080. To the upside there is resistance at 7350, 7450 and those April highs at 7500.
Head Market Analyst
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